Skip to main content

Commons Chamber

Volume 931: debated on Tuesday 10 May 1977

The text on this page has been created from Hansard archive content, it may contain typographical errors.

House Of Commons

Tuesday 10th May 1977

The House met at half-past Two o'clock


[Mr. SPEAKER in the Chair]

Oral Answers To Questions

Social Services

Child Benefit


asked the Secretary of State for Social Services whether he will make a statement on the payment of child benefit for non-resident children.

Subject to EEC arrangements and reciprocal agreements with other countries, child benefit is not payable in respect of a non-resident child unless the child has previously been in Great Britain but is temporarily absent. This was also the position for family allowances.

For the definition of temporary absence I refer the hon. Member to my reply to my hon. Friend the Member for Rotherham (Mr. Crowther) on 5th May.

If the Minister accepts that the costs of those with the responsibility of bringing up families are higher than the costs of those without such responsibilities, what is the moral argument for not extending the new child benefit to 200,000 families with non-resident children?

We are adopting the same policy on child benefit as we did on family allowances. The scheme is a replacement of one cash benefit by another cash benefit. Family allowances were not paid in respect of children living abroad. We are operating the same principle with the child benefit scheme.

I recognise the difficulties of paying child benefit to non-resident children, but does my hon. Friend not agree that it would be grossly unfair to withdraw the child tax allowance from those who cannot get the benefit of the child allowance for their children overseas? At the least, until such parents have had a full opportunity to bring these dependent children over here if they wish to do so, will my hon. Friend postpone the cancellation of child tax allowance for these children?

Child tax allowances are a matter for my right hon. Friend the Chancellor of the Exchequer. A concession has been made on those allowances for the current financial year in Clause 23 of the Finance Bill. An announcement about future years was made by the Financial Secretary on 1st April.

Since, when this policy was discussed in June last year, the Secretary of State accused me of wanting to leave 200,000 families positively and sharply worse off, will the Under-Secretary of State ask his right hon. Friend to withdraw his criticism—or does he now admit the charge?

I am sure that my right hon. Friend can deal with that charge. Those families will not be sharply worse off, because of the concession that is being made by the Government in the current Finance Bill.

Does the Minister accept that these families will be made sharply worse off as soon as the Government's decision to phase out tax allowances is finally put into effect? Does he agree that as child benefit is a combination of family allowance and child tax allowance, making child benefit not payable is sharply discriminatory to heads of families who happen to have children abroad?

We have made a special concession on child tax allowance for non-resident children for the present financial year. Thereafter they will revert to the child tax allowance that is appropriate to other families in this country. We have tempered the wind to the shorn lamb for the present financial year.


asked the Secretary of State for Social Services whether it is administratively possible to begin the full child benefit in April 1978 instead of waiting until 1979–8.


asked the Secretary of State for Social Services whether he will increase child benefit rates in November 1977.

It would be administratively possible to begin the full child benefit scheme in April 1978, but our intention is to continue with the phasing in of the full scheme over the period up to April 1979 in line with the recommendation of the Joint Labour Party-TUC Working Party.

Child benefit will not be increased in November 1977; it is to go up in April 1978 in accordance with the next phase of the transfer of family support from child tax allowances.

Does the Secretary of State recognise that the position of families with children is relatively worse now than when this Government came to office, and that the increase in bread and milk prices in the past seven days will further aggravate family poverty? Is not the Government's record over child benefit one of a complete lack of courage and concern for married couples with children, on whom inflation falls particularly hard?

Whatever the hon. Member may say, when his Government were in power child benefits were not introduced. I am very proud that this Government have fulfilled their pledge and have introduced child benefits, which will be the foundation of family support for years to come.

Does the right hon. Gentleman accept that large increases in unemployment dependency allowances for children, by comparison with the small increases in child benefit, will make it more worth while for many family men with children to be unemployed than employed? Will he talk to his right hon. Friend the Chancellor about putting this state of affairs right so that we have a proper family policy?

I believe that we have a proper family policy. The number of people for whom it is any advantage at all to be unemployed as opposed to being in employment is very small indeed. This is one of those canards that the Opposition have flogged around the country. It is absolutely untrue, and it does a great deal of damage.

Is it not a fact that since the working party produced its compromise report for phasing in child benefit the Chancellor has made £1,800 million available for tax reliefs which do not benefit children at all? In that situation, will not my right hon. Friend fight for an earlier increase in child benefit and, at the very least, for the automatic up-rating of child benefit in November with the rest of the benefits?

I can assure my right hon. Friend that I want to see the most substantial increase in child benefit that is possible in April next year. The possibility of an increase in November is simply not on, but I hope that next year we shall see a substantial increase, which will show the full significance of child benefit as introduced in this House.

Will the right hon. Gentleman urgently review the special cases that are worse off in absolute terms as a result of the child benefit scheme, concerning which I have already written to his Department?

I shall examine the correspondence that has come from the hon. Gentleman. If we take into consideration the tax remissions in the Budget, there is no one who is actually worse off in this context. There were some high taxpayers who were marginally worse off as a result of the child benefit scheme, but they will be marginally better off as a result of decisions already announced by my right hon. Friend the Chancellor.

Personal Social Services (Expenditure)


asked the Secretary of State for Social Services what will be the percentage increase in expenditure in real terms on the personal social services between 1976–77 and 1977–78.

We are planning for an increase in current expenditure in England of about 1 per cent. in real terms and a decrease of 30 per cent. in capital expenditure. But I have increased from £8 million to £21 million the amount that health authorities may contribute to mutually beneficial social services schemes financed jointly with local authorities. The £21 million represents about 2 per cent. of overall local authority expenditure on the social services, and that will enable spending to be maintained at about the same level as last year.

Is it not a fact that demand on personal social services is expanding at over 2 per cent. per annum? Given that there is this pressure on personal social services, is the Secretary of State satisfied that he has the right priorities between expenditure on the National Health Service and expenditure on personal social services?

The Government planned for a 2 per cent. growth in current expenditure on personal social services. It is estimated that expenditure in 1976–77 reached the level planned for 1977–78. Because I was so worried that some services might slip, I increased by almost threefold the amount of funds available for joint financing. That has been welcomed by the local authorities.

I recognise my right hon. Friend's difficulty, but is he aware that many local authorities are neglecting the Chronically Sick and Disabled Persons Act? Will he press all local authorities to aim at a 90 per cent. increase in expenditure under Section 2 of that Act, as envisaged in last year's priority document?

I shall be publishing shortly the results of the consultations on the consultative document. I am concerned about the extraordinary variation in performance between one local authority and another. The Minister with special responsibility for the disabled is frequently in touch with local authorities about this. I am anxious that some local authorities, as a result of events last Thursday, may be less prepared to look after the needs of disabled people than they were before.

While noting that the Secretary of State has just made a totally untrue allegation, may I ask him what encouragement he intends to give to voluntary organisations and self-help groups, which are springing up all round the country, to assist in the personal social services, which we regard as the mainspring for helping people who need the real help that we ought to give as a society?

Bearing in mind the hon. Lady's initial comment, having read the manifestos of a number of those Conservative candidates who were successful, I think that I have every reason to express concern because of the threats about cutting expenditure. However, to deal with the main part of the question, I agree with the hon. Lady. There is a very important rôle for voluntary organisations. That is why, in the budget for this year, I have increased by 60 per cent. the amount of money available from my Department to assist voluntary organisations.

Industrial Injury (Hardship Allowances)


asked the Secretary of State for Social Services how many people are currently in receipt of hardship allowances as a result of industrial injury.

142,000 people were receiving special hardship allowance on 30th September 1975, the latest date for which figures are available.

Will my right hon. Friend explain why it is that where so many of these benefits, such as hardship allowance, are linked to a medical examination, very often the allowance is curtailed before the medical examination takes place, thus meaning that the person is without money pending confirmation that he is still in need of hardship compensation?

That is not the policy of the Department. If my hon. Friend has in mind specific cases, perhaps she will draw them to my attention.

Mobility Allowance


asked the Secretary of State for Social Services whether he has any proposals to commute the mobility allowance.

I am hopeful that a scheme may be worked out that will enable some disabled people to use their enhanced mobility allowance for the purchase of their own vehicle. I and my officials are assisting in every way we can to get such a scheme ready for implementation. The British Association for Disability and Rehabilitation—BADAR—recognises that such a scheme will have to be selective and cannot depend entirely on Government funds.

Will the right hon. Gentleman make every effort to persuade the Chancellor of the Exchequer to relieve the commuted mobility allowance of taxation? In view of the 3,500 disabled people who, since his announcement last year, are no longer eligible for vehicles, will he reverse his decision to withdraw the invalid vehicle service?

We debated this matter at some length about 10 days ago. In answer to the second half of the hon. Gentleman's question, I cannot possibly reverse the decision. I gave the reasons then for not doing so. Certainly if I were to do so many disabled people who know the dangers of the trikes, particularly for new drivers, would be very angry indeed. The hon. Gentleman will remember the very strong campaign that was run in order that we should phase out the trikes. I think that the most important thing of all is that we should be able to achieve a scheme—I am determined to add my efforts to those of my hon. Friend the Under-Secretary—that will enable the maximum number of disabled people to purchase a vehicle suitable to their needs.

Has the right hon. Gentleman any idea when this scheme will be implemented? What is the extent of the experiments that will be initiated at these early stages?

We are working as quickly as we can. There has been a series of meetings with what used to be the CCD and is now the BADAR in its combined form. I cannot give a date by which we shall be able to make an announcement. However, it is encouraging that other organisations are coming forward ready to help. Chrysler's scheme to enable disabled people to buy cars at a substantial discount is already in operation. British Leyland and Vauxhall will begin their schemes on 1st June. There are now negotiations with Ford, among others, and they, too, are well advanced. Therefore, from a variety of sources—and I believe that we shall find cash from voluntary sources—a great deal is now being done.

What progress is being made with the design and possible production of a vehicle specially designed to replace the trike?

May I put it to the Secretary of State that he fudged the issue when replying to my hon. Friend the Member for Exeter (Mr. Hannam) when he spoke about the 3,500 disabled people who would have received three-wheelers under the old rules but will not now receive them under the new rules? Does the right hon. Gentleman appreciate the frustration and let-down felt by those people when they hear of increased expenditure on the disabled?

I say again that this question of urging that there should be increased expenditure is a little too much. The argument has been put forward that it is of great concern to people who cannot immediately now claim a trike, which they could do previously, and who have now seen the announcement that there is an increase in the mobility allowance. The mobility allowance will help precisely those who cause the hon. Lady concern, as well as many other seriously disabled people who have no possibility of driving at all. It is quite unreasonable for the Opposition constantly to press that we should put into reverse a policy that they themselves supported when it was first announced in the House.

When my right hon. Friend is looking for money for this very desirable purpose, will he take a leaf out of the Foreign Office's book, because it has transpired over the last few days that the Foreign Office has been providing for its staff interest-free car purchase loans for 28 years, completely without parliamentary authority and without Parliament being told? If the Foreign Office can be caught with its hand in the till in that way, why cannot the Secretary of State get his hands on some of the money?

Hospital Waiting Lists


asked the Secretary of State for Social Services in which year waiting lists for National Health Service hospitals were longer than in 1976.

I have only provisional figures, and it seems likely that in 1976 there will have been the longest lists of patients waiting and the largest number of in-patients treated.

I am determined to tackle this problem of waiting lists, which has plagued the NHS for the past 20 years. Under my supervision a report on waiting times has now been prepared with a series of constructive proposals. I am seeking the views of the health authorities, the Joint Consultants Committee and other professional bodies.

To what extent does the Secretary of State think that the Government's cut-backs in hospital spending are causing these lists to be as long as they are? What thought has he given to keeping open the surgical and other medical facilities at small hospitals, such as that in Newbury, which appear to be having to be closed down because they do not rate as district general hospitals?

There is a variety of reasons why the waiting list has in creased, such as the increasing elderly population and, therefore, the increasing demand for surgery in particular, and for other forms of treatment. There is also the industrial action that took place, and certainly, of course, the limitations on public expenditure—though I cannot say that in this case it is a question of cutbacks in public expenditure, because we are still in a position of growth in terms of public expenditure. However, I do not believe that the problem would be solved by any means by simply holding on to a large number of small, uneconomic hospitals. There is a wide variety of solutions to the problem. The document that I am now circulating puts forward some very constructive proposals.

Is my right hon. Friend aware that a constituent of mine who is awaiting admission to the plastic surgery unit at Sharoe Green Hospital, Preston, has been advised in the last few days, by letter, that 1,500 people are waiting for admission and that some will have to wait for a period of 10 years before they receive treatment? Is that situation not totally outrageous? What effect does queue-jumping have upon the situation?

In answering the original Question I said that I am extremely concerned about the matter of waiting lists. It is a problem that exists in my constituency as well as in the constituency of my hon. Friend. It is at least encouraging that 90 per cent. of those on waiting lists are classified as waiting for non-urgent treatment. The situation is now improving somewhat, because the number of people awaiting admission to hospital for urgent treatment fell by 5½ per cent. between March and September 1976, so what had been a worsening situation is now a situation which, for the first time for some time, is beginning to improve.

Since the length of the waiting lists is in some part dependent on the level of morale in the National Health Service, is the Minister aware that medical morale is being very severely shaken by the dreadful handling of the Doctors' and Dentists' Review Body Report? This report has been leaked to the medical Press and some family practitioner committees have draft amended statements on fees and commissions. When will the Government tighten up on this sort of thing, and when will they publish the report?

I do not follow how this question arises from a Question about waiting lists. If the right hon. Member will table a Question, I shall answer it. He touches on the subject of the morale of consultants. He should be aware that the number of consultants in post in England and Wales has increased by 3·4 per cent. in the last year, which indicates a movement forward in the National Health Service.



asked the Secretary of State for Social Services whether he will introduce an interim increase for retirement pensioners in the summer.

No. As my right hon. Friend has already made clear, pensions and other social security benefits will be uprated in November.

Does my right hon. Friend agree that in this year, when we have two transition periods as a result of our entry into the EEC—which has resulted in greater increases in food prices, which particularly hit old-age pensioners—there is a cast iron case for having two pension increases instead of one? Will he tell us whether pensioners will get the £35 put forward by the TUC when he makes his announcement for the autumn increase?

I am aware of my hon. Friend's concern about this matter and, indeed, the concern of the whole House about pensioners. I remind my hon. Friend that there has been a net increase of 15 per cent. in the purchasing power of the pension since we came to office. I give him an assurance that the uprating in November will more than cover the rise in inflation.

Will the Minister confirm that even with the 12 per cent. uprating widows and women who retire at 60 are still paying tax even though they have no income except the pension? Does he have any plans to talk to the Chancellor about this disgraceful state of affairs?

The hon. Lady knows that the Chancellor is aware of tax levels. He referred to them in his Budget and he has already done something about them.

Will the pension uprating be based on what inflation was or what the Government would like to think it might be?

There is a later Question on the Order Paper on that point. The uprating will be on a November-to- November basis and will be based on whichever is higher, inflation or wage increases.

Disabled Persons (Vehicles)


asked the Secretary of State for Social Services what studies he has made of cars for disabled drivers in other EEC countries.

A number of other EEC countries have provisions for helping disabled people to acquire cars, subject to conditions varying from one country to another. I under stand that in most of these countries Government benefits do not include either the issue of a specialised vehicle or a cash benefit, like the mobility allowance, which is paid without conditions as to employment or ability to drive. My Department is seeking fuller information from the EEC Commission.

Does the Minister recognise that for two years now we have been pressing him for this information, and that the delay is causing some concern? Is he aware that the need for a replacement for the trike is a matter of considerable urgency? Will he tell the House the exact state of affairs concerning the design of the replacement for the trike?

I can assure the hon. Member that we are in touch with the European Commission on this matter. I remind him that the Director of the Central Council for the Disabled, and its successor organisation, the British Association for Disability and Rehabilitation, speaking of the British mobility allowance scheme, said that the Government had

"produced a most imaginative scheme in the Mobility Allowance. The concept is much admired by Europe."
There are Questions later on the Order Paper about making specialist vehicles. I am in close touch with all developments in this field.

Many of us are concerned that as there is no one vehicle to satisfy all the needs of the disabled, the Minister should consider great flexibility in this field. Many of us feel that all those disabled people who are able to drive should be able to do so, and that to talk of one single vehicle is to hold out a false promise.

Those are very wise words. Disabled people are not standard, and to talk of providing a standard car is to make a false assumption. The point that my hon. Friend the Member for Eccles (Mr. Carter-Jones) has made is very much in my mind and in the minds of all those hon. Members on both sides of the House who think deeply about these matters.

Will the Minister justify the statement that was made earlier and tell us what evidence there is that disabled people do not want to see a continuation of the trike until an alternative vehicle is available? In February this year there was a unanimous request that the trike policy should be changed. Will the Minister talk to representatives of the disabled on 17th May?

There are many claims upon us in this field. There is a very strong campaign, on safety grounds, against the invalid tricycle, and I have answered one question after another on that issue. There are people who want the trike, and my right hon. Friend has explained why it cannot be supplied indefinitely. I assure the hon. Member that I am closely in touch with organisations representing the disabled and I shall certainly see anybody representing the national organisations. In fact, arrangements are being made for me to see national representatives on 17th May.

Granny Bashing


asked the Secretary of State for Social Services what evidence he has that so-called "granny bashing" is a growing problem; and if he will set up an investigation to establish the relationship between this problem and the need to care for elderly relatives.

Domiciliary care staff are well aware of the need to be on the alert for any possible signs of ill-treatment but I have no evidence that this problem is increasing. I have, however, decided to fund a research project into the support needed by families caring for elderly relatives. I am sure that good neighbours can be an important factor in helping to provide such support.

While thanking the Secretary of State for his announcement, I wonder whether he is fully aware that many people suffer great hardship from looking after elderly relatives for long periods, especially in areas where there is an acute shortage of geriatric beds. Will he do more to increase the supply of geriatric beds so that relatives can get a break from caring for elderly relatives, and will he see that more community support is available for caring for these elderly people?

I agree absolutely about the need for more geriatric beds. Also, it is essential that there should be more provision for these elderly people in the community. It is interesting that in the joint financing project a high proportion is devoted to helping people in this category. The purpose of the research is very important. There is a whole range of specific factors, such as incontinence and sleep disturbance, which provoke crises in families looking after elderly people. The research will investigate all the facts and the possibility of relieving measures, such as measures for dealing with incontinence, laundry services, sitter-in services, night sitting and night nursing facilities, and a whole range of other services to assist families who have the responsibility of caring for elderly relatives.

As my right hon. Friend spent much of last Friday in my constituency, did he take note of the prodigious work done in hospitals there—hospitals that are grossly under-staffed—and in domiciliary services? Does he accept that, while his research project is welcome, it is no substitute whatever for more help in the hospitals and more domiciliary care for the elderly?

What I saw in my hon. and learned Friend's constituency was one of the finest examples of a new community hospital, which at the moment is dedicated entirely to providing support services for precisely the sort of elderly people whom we are talking about. I thought that it was a prime example of the sort of service that the Health Service can provide and is increasingly trying to provide to meet just this problem.

Death Grant


asked the Secretary of State for Social Services what representation he has received from the National Federation of Old Age Pensioners about the level of the death grant.

Representatives of the federation urged my right hon. Friend to raise the death grant when he met them in February. Two branches of the federation have also written to us this year on the same issue.

Does the right hon. Gentleman accept that the present level of death grant is creating great personal distress for some elderly people, particularly those who have no savings left? It is therefore imposing a burden on their families. Will he admit that it is scandalous that there has been no increase in the death grant since 1967?

The straight answer is that this is a question of priorities. The Government have to consider this matter against pensions and other benefits. We know that the pressure is on for an increase, but this matter comes lower down the scale at the moment.

Is my right hon. Friend aware that I have a later Question relating to this matter? Is he also aware that the death benefit is hardly sufficient to pay the tips of the men who are handling the burial? Will he please consider the urgency of increasing the death grant?

I am aware that many hon. Members, including my hon. Friend, have raised this matter with mc, but I must reiterate that it is a question of finance, public expenditure and priorities.

Although one recognises that this question is a matter of priorities and that it is unlikely that the death grant can be increased for everybody for a long time ahead, does the right hon. Gentleman agree that it is time that there was some selectivity and that those whose families are in receipt of supplementary benefit should be allowed an increase in the death grant?

I find it difficult to follow the hon. Gentleman's reference to selectivity. I can understand much of the pressure that I am getting from my hon. Friends on this matter, but not that from Opposition Members. They are again urging more public expenditure at a time like the present.

Does the right hon. Gentleman not recognise that for these schemes to have reality the benefits must bear some relationship to the contributions? Since the contributions have been advancing steadily over the years, is it not high time that the death grant was raised?

That is a very fair point and I take note of it. Certainly the Government want to do something about this matter when the finance is available.

Is my right hon. Friend aware that the Tory-controlled local authority in Rossendale, in my constituency, recently introduced massive increases in charges for grave spaces and that this action in itself is causing a great deal of hardship among old people who are concerned about the fact that they can no longer afford to purchase a grave space for their relatives?

I am tempted to say that that is a very grave matter. In effect, my hon. Friend has reiterated the point made by the Secretary of State earlier today about expenditure by some of these Tory authorities. When it comes to the issue, they cut vital social services.

Health Services Board


asked the Secretary of State for Social Services whether he is satisfied with the working of the Health Services Board.

The Health Services Board is an independent statutory body and is not responsible to me for the way in which it discharges its duties under the Health Services Act. I have every confidence in it.

How many pay beds have so far been phased out and how many extra beds have become available as a result to NHS patients? Will the right hon. Gentleman comment on allegations by the Socialist Medical Association that the spaces left vacant by pay beds are being turned into storerooms and laboratories?

On the second half of that question, the Act requires that every effort is made to ensure that the pay beds that are closed are used productively. An amendment to that effect was accepted in debates on the Bill. As for the number of beds phased out, as the House will know, I am responsible for the phasing out of the first 1,000. I have been in consultation with the health authorities. I have now completed that consultation, and authorisations will take effect as from 20th May, and I shall make a further announcement to the House about the matter.

Does my right hon. Friend accept that progress in phasing out pay beds from the National Health Service has not been fast enough and that until all pay beds are eliminated from it we shall never have an equitable or efficient Health Service?

I shall not go over the whole debate that we had. I think that I and all my hon. Friends recognise the wisdom of the measure that we passed through the House. Quite apart from the 1,000 pay beds that will be phased out by my decision, the board is now busy consulting about the first group of beds for which it has responsibility and it will be reporting to me in July.

Does the right hon. Gentleman accept that there is widespread and serious criticism of the way in which the board was set up and is conducting its business? Is it not clear that if it is to fulfil the requirements of the Act, it will need more time than it has at the moment?

I do not accept that there has been any such criticism. This is a very well balanced board which has got down to its job quickly. Its members asked me whether they could have a little more time to make their first report to me, and I readily agreed. In fact, I offered them more than they asked for but they said that they did not need it. I am very satisfied that the board is doing its job thoroughly, with maximum consultation.

Retirement Age (Men)


asked the Secretary of State for Social Services whether he will seek power to introduce phased retirement for men.

No, Sir. I refer my hon. and learned Friend to the arguments and costings in my Department's memorandum of last year entitled "Pension Age".

Is my right hon. Friend agreed that in principle there can be no justification for different retirement ages for men and women? Is he agreed in principal on retirement equality for men?

My hon. and learned Friend asks me about principle. Obviously the Government would want to work towards equalisation, but that will take time. This is a matter of costings. My hon. and learned Friend will have seen the sort of public expenditure that would be needed to bring about an equal pension retirement age in the paper that we produced.

In the present situation, in which we are faced with long-term structural unemployment, does my right hon. Friend agree that the odds are very heavy that the job of every man who is put on pension will be taken up by someone on the unemployment register and that the net costing of such an operation would be little or nothing? If there is the long-term phasing in of a lower retirement age, and, having looked at the booklet in some detail—

We shall learn a great deal from the job exchange scheme. Sometimes people who retire quite rightly seek other employment. We hope that when we return to full employment the problems to which my hon. Friend has drawn attention will not exist.

In the meantime, can we not make a start by offering the option of a retirement pension to those over 60 who are made redundant?

Again, the point is the cost. Pensioners would not want to take a reduced pension. If they were to get the full pension, the State would have to pay for it.

Benefits (Uprating)


asked the Secretary of State for Social Services when the social security uprating announcement will be made.

Does the right hon. Gentleman regard the review that he carried out in the previous financial year as a State secret? If so, why?

Although my right hon. Friend must get fed up with the double standards of Opposition Members who advocate savage cuts in public expenditure on the one hand and increases on the other, will he bear in mind that the proposed increases in the charges for meals will hit some families extremely hard? Surely this should be taken into account when considering whether he is able to increase the child benefit allowances.

I can assure my hon. Friend that in taking what must be a difficult decision on what should be the level of uprating to take place from November, I must take into account all the different changes in prices, including the price of food and the retail price index. I can assure the House that the uprating will be sufficient to restore the value of benefits that were introduced in November 1976.

As we were told by the right hon. Member for Blackburn (Mrs. Castle) on 29th April that the latest date to start an orderly implementation was last week if the increases were to be paid by November, why is the Secretary of State waiting? Will he give an absolute, categorical denial that there is no question of using the size of the uprating as a bargaining counter with the TUC?

I can assure the right hon. Gentleman that I shall be making my announcement very soon. It will be based entirely on a decision taken by the Government. It will not be part of any bargaining counter. I can assure the right hon. Gentleman that he is wrong about the date. The latest date for announcing a mid-November uprating would be early in June. That would be inconvenient in view of what is likely to be the recess. I hope, therefore, that the announcement will be made before the end of the month.

Handicapped Children (Pamphlet)


asked the Secretary of State for Social Services whether he will make a statement about the recent pamphlet on handicapped children by the National Development Group.

I refer the hon. Gentleman to my right hon. Friend's reply to my hon. Friend the Member for Brent, South (Mr. Pavitt) on 9th March.

Does the hon. Gentleman accept that the pamphlet issued by the National Development Group strongly endorses the recommendations of the Court Committee? Will he agree to give positive discrimination in favour of handicapped children as a matter of policy, if necessary on a joint financing basis?

I think that I can consider all those points sympathetically. We are consulting on the pamphlet and on the Court Committee. We are giving the highest priority to mentally handicapped children and we expect joint financing to make a considerable contribution.



asked the Prime Minister when he next intends to pay an official visit to Merseyside.

The Lord President of the Council and Leader of the House of Commons
(Mr. Michael Foot)

In the absence of my right hon. Friend, who is presiding at a meeting of the NATO Council of Ministers. I have been asked to reply.

My right hon. Friend has at present no plans to do so.

I ask my right hon. Friend the Lord President whether he will ask his right hon. Friend to reflect on the election results of last Thursday if he cannot visit Merseyside. Will he point out to the Prime Minister that the electorate on Merseyside, scourged with heavy unemployment, is not reacting to the Lib-Lab pact as being the ways and means of finding a solution to its problems? Will he further urge my right hon. Friend to consider the possibility of a pact with the National Executive Committee of the Labour Party and the Labour Party Conference to find Socialist solutions to the problems on Merseyside?

I agree with my hon. Friend that the results are extremely serious from the point of view of everyone on Merseyside. I can assure my hon. Friend that the Government will take account of them. They will take account of all the representations that he and others have made on the matter. We shall seek to sustain our policies for assisting, in particular, the firms on whose behalf my hon. Friend has made strong representations. I am doubtful whether we shall get any assistance on these matters from the newly-elected representatives on Merseyside.

In view of the question of the hon. Member for Liverpool, Garston (Mr. Loyden), would not the right hon. Gentleman be wise to take the opportunity of going to Merseyside and meeting the architect of the Liberal showpiece on Merseyside, "Jones the Vote"? Should not the right hon. Gentleman comfort his new colleagues with the fact that both their parties had catastropic results in the Merseyside elections?

If I might use the same colloquial terms as the right hon. Gentleman, I have always preferred "Steel the Vote" to "Jones the Vote". On the whole, he has delivered it a good deal better.

Does my right hon. Friend accept that one of the best examples of Tory freedom in action is the manner in which Foster Plastics, of Rain-ford, in my constituency, has sold out to a competitor without consulting or considering the interests of the workers, most of whom have been callously thrown on the scrapheap? Is this not an example of Tory freedom and free enterprise, in which the interests of workers come last, and when the pawns in the takeover battles are never consulted or considered?

My hon. Friend raises matters of great seriousness. We should all be aware of the extremely serious employment situation on Merseyside. In reply to the questions of my hon. Friends the Members for Ormskirk (Mr. Kilroy-Silk) and Liverpool, Garston (Mr. Loyden) I would say that in response to the representations that have been made to us by the hon. Members for Garston, Liverpool, Walton (Mr. Heffer) and others from Merseyside on the cases of individual firms, asking for Government intervention and Government money, there has been a considerable amount of intervention and a considerable amount of money has been supplied. But that is contrary to the policies preached by those who have temporarily taken power in Merseyside.

Will the Lord President advise his right hon. Friend that the anti-Labour feeling in Merseyside is due to a rejection of Socialism, which is shown by the two-thirds majority that the Conservatives now hold? Do the right hon. Gentleman and his right hon. Friend realise that the rejection of Socialism has occurred because there are now no jobs on Merseyside? What hope can he give to school leavers in my constituency that under this Government there is a chance of their getting a job when they leave school?

If it had not been for intervention by the Government, about 20,000 people now in jobs in Merseyside would not have had them. That work has been sustained by Government intervention. We believe that that process has to be extended over the period to come. The Manpower Services Commission, in particular, has produced a recent report in which it has made recommendations—and I believe that the Government will be eager to act upon them as speedily as possible—for further assistance for young people, who form a major part of the problem. What is requited is Government intervention, and those on the Government Benches understand the fact.

Is my right hon. Friend aware that if one analyses the votes on Merseyside one sees that Opposition Members have nothing to crow about and that in a General Election the results on Merseyside would be precisely as they are now? [Interruption.] Yes—with more Labour seats than Tory seats. Is my right hon. Friend further aware that if Conservative policies were carried out, with massive further cuts in public expenditure plus a failure to assist in bringing industry to Merseyside, unemployment there would be far higher than it is?

I fully accept what my hon. Friend has said. I could not have said it better myself. If those Opposition Members who to judge from these questions, have apparently shown some interest in Merseyside had taken rather more interest in previous discussions, they would have realised that representations have been made by my right hon. and hon. Friends on matters affecting employment on Merseyside over many months and that some of the improvements that we have been able to achieve have been achieved precisely because we have responded to those representations.

Foreign Secretary (Speech)


asked the Prime Minister if the speech made by the Secretary of State for Foreign and Commonwealth Affairs on economic policy at Castleford Trades and Labour Clubs on 23rd April 1977 represents Government policy.


asked the Prime Minister if the speech made by the Secretary of State for Foreign and Commonwealth Affairs on economic policy at Castleford Trades and Labour Clubs on 23rd April 1977 represents Government policy.


asked the Prime Minister if the public speech by the Secretary of State for Foreign and Commonwealth Affairs on economic policy in Castleford on 23rd April 1977 represents Government policy.

I have been asked to reply.

I refer the hon. Members to the reply that my right hon. Friend gave to the hon. Member for Christchurch and Lymington (Mr. Adley) on 2nd May.

Does the right hon. Gentleman recall that in his speech the Foreign Secretary said specifically that the Government, ahead of any negotiations with the TUC, had already decided on a ceiling of 8 per cent. or 9 per cent. for wages policy in phase 3, and that he went on to say that if this was not possible we should be in danger of losing all the ground so painfully won? As most sections of society have now experienced the pain, can the right hon. Gentleman give some examples of the ground that has been won?

The hon. Gentleman is under a misapprehension. My right hon. Friend the Foreign Secretary did not state the matter in the terms set out by the hon. Gentleman. The figure that he referred to in his speech was a single-figure pay-price equation. He referred to the desirability of securing such a figure, and, of course, that figure itself was referred to by the TUC in its economic review.

In the light of the statement made by the Prime Minister following the economic Summit, can the right hon. Gentleman clarify whether it is the lowering of the inflation rate or the lowering of the unemployment total that is now the Government's new and first priority? If it is the latter, will he help the House by giving a forecast of the number of people who will be unemployed by the end of the year?

The hon. Gentleman seeks to play with words. My right hon. Friend and the communiqué stated plainly that priority would be given to creating jobs and overcoming the common unemployment problem that we have in all our countries. My right hon. Friend and others emphasised also that this is inextricably tied up with the fight against inflation as well.

In relation to pay and prices policy, have not the events of the last 24 hours shown clearly that High Street competition, with or without Green Shield stamps, is worth more to the housewife than any number of stage 3s, prices Bills and price codes?

I do not think that that is what most of the housewives in the country think about the situation. Indeed, if they were satisfied with that form of competition, they would not have been misled into voting as they did on Merseyside. It is precisely because of the general inflation that they took many of the courses they did. I assure the hon. Gentleman that his solution is not one that can be applied properly and successfully across the economy as a whole.

As the Question refers to the economic policy of the Government, will my right hon. Friend confirm that the agreement reached at the Summit Conference will in no way adversely affect the existing hope of extending legislation in respect of dumping in the clothing, steel, textile, leather and other industries in this country?

I can give my hon. Friend confirmation on that point. As my right hon. Friend the Prime Minister indicated, there was no change of policy in that respect. These matters are governed by provisions involved in international arrangements which have already been reached.

I recognise the right hon. Gentleman's reluctance to give a figure in respect of pay policy, but does he accept that in phase 3 of the Conservative Government's policy an earnings increase of well over 16 per cent. was allowed? Does he accept that anything better than that would at least be an advance on Toryism?

I would not go into any figures, but I hope that I shall not cause any difficulties with the hon. Gentleman. One of the special difficulties that the Conservatives left us in dealing with these matters was their insistence on a statutory incomes policy. We do not believe that that is the right way to deal with the situation. As far as figures are concerned, I have indicated the general terms in which my right hon. Friend the Foreign Secretary referred to the matter. But all these aspects are for general discussion between the Government and representatives of the TUC, and we have not discussed matters in these terms at all.

Why has the right hon. Gentleman not answered the supplementary question put by my hon. Friend the Member for Thanet, East (Mr. Aitken)? If the Prime Minister was being serious yesterday in saying that the fight to find jobs for our people is now the primary fight, why cannot the right hon. Gentleman give even a target for the end of this year?

The hon. Gentleman knows, and everyone with experience knows, that it would be absurd to give a figure for the whole of the countries that are involved. There are 15 million unemployed in the Western world. No one could give a sensible target of what could be achieved by the end of the year in that respect. Therefore, it would not be possible to relate these general measures to particular countries, either. This matter does not bear any relevance to the rather dodgy supplementary question that the hon. Member for Thanet, East (Mr. Aitken) put. [Interruption.] The answer has been dodged because the question was not designed to get a clear answer.

If the Government have not a target for the movement of employment over the next 12 months, quite apart from the question whether they could hit that target, will it not be extremely difficult for them to announce very shortly, as they promised, the figure for the up-rating of pensions next November, which, under the forecasting method, has to be linked with the future movement of earnings? Would it not therefore be wiser for the Government to return to the historical method, or allow a very large margin of contingency in case earnings turn out to be a great deal higher than they intend?

I did not make any statement about the Government not having a target for earnings; I was asked whether the Government would give a target for unemployment by a specific time, or at any rate an approximate time. That did not relate to anything about earnings. The hon. Member for Chertsey and Walton (Mr. Pattie) asked me about the speech by my right hon. Friend the Foreign Secretary, and I recalled the general terms in which this matter was referred to in the TUC document. As I indicated earlier, we have not reached any discussion of the detailed figures in talks with the TUC on these matters as yet, and therefore the question put by my right hon. Friend the Member for Blackburn (Mrs. Castle) does not arise.

Since the Foreign Secretary is a member of the medical profession, and since leaks of the Doctors' and Dentists' Review Body Report show that it is entirely within the pay policy, why has that report not yet been published?

The right hon. Gentleman seems to have an obsession with this subject. The Government are entitled to consider the matter, and I am sure that all the right hon. Gentleman's doubts will eventually be allayed.

Question Of Privilege (Mr Speaker's Ruling)

Yesterday the hon. Member for Sowerby (Mr. Madden) raised as a matter of privilege certain expressions allegedly used about his fellow Members by the hon. Member for Antrim, North (Rev. Ian Paisley) during the course of a radio broadcast on Wednesday of last week.

Before I rule on whether I am able to give this complaint precedence over the Orders of the Day, I must explain both to the hon. Member for Sowerby and to the House that I am bound by the practice of my predecessors, which has now become a firm rule of the House, acknowledged by the Select Committee on Parliamentary Privilege of 1967–68. That is, that a Speaker can afford precedence only if a complaint of privilege is raised at the earliest opportunity.

It would be a departure from that rule if I allowed a Member to wait until a broadcasting authority supplied him with a copy of a transcript of a broadcast before deciding whether or not to make a complaint. Statements broadcast by radio are in this sense no different from any other statements; they must be raised as soon as possible.

In this particular case, I find that the words complained of by the hon. Member for Sowerby were reported almost word for word in at least one national daily newspaper on the day after the broadcast and could have been raised with me last week.

I must therefore rule that I cannot give the complaint precedence over the Orders of the Day.

Having said that, I think I would be failing in my duty as Speaker if I did not condemn in the strongest possible terms the use of such language by the hon. Member for Antrim, North about his colleagues in this House, if he has been correctly reported. Expressions of this nature should not be used by any Member about other hon. Members, whether inside or outside the Chamber.

I regret that I have to say this in the absence of the hon. Member for Antrim, North. I would much rather have said it in his presence, if that had been possible.

I shall take points of order, but I hope they are not challenging my ruling.

On a point of order, Mr. Speaker. Following that ruling, it would be helpful to the House if we could have guidance on one point. As I understand the practice, in the past Speakers have preferred, after an hon. Member has made a verbal complaint of breach of privilege of this nature, to have the original source of record handed to the Speaker on which to investigate. If it is to be the case that in future Mr. Speaker prefers a second-hand reference, and not a primary authority of the words recorded, it would be helpful if this were explicitly stated from the Chair, because I think many hon. Members were genuinely under the impression that the Chair preferred to have an authentic record of the words said, spoken or written on the first occasion when they were available rather than a second-hand record of words which had been spoken elsewhere and which might not be a correct record.

I respectfully submit that if the Chair adopts the preference of a second-hand report this might involve the Chair in having to rule on words which have not in fact been spoken and which could be inaccurate in the second-hand report. Not with reference to this particular case, Mr. Speaker, but on the general principle, I would be most grateful if you would give consideration to this point of general principle and share your thoughts with the House when you have considered it.

The Lord President of the Council and Leader of the House of Commons
(Mr. Michael Foot)

Further to that point of order, Mr. Speaker. May I support what the hon. Member for Tiverton (Mr. Maxwell-Hyslop) has said in the sense that I believe that it would be desirable to look at this aspect of the question? Possibly, since the Committee of Privileges is looking at another general aspect of the matter, it might look at this aspect as well and include some reference to it in the report which the Committee is preparing for the House.

Further to that point of order, Mr. Speaker. I shall in no way challenge your statement, because I think it reflects the difficulties in which all of us are placed with regard to matters of alleged breach of privilege which are broadcast as opposed to those which are published in newspapers. I would ask whether you would allow consideration to be given to a modification of the rules under which we work at present, because I believe we are placed in considerable difficulty.

I understand the need to bring matters of privilege to your notice at the earliest opportunity. Equally, I think we must always have an accurate record of what is said, and I think it must also be borne in mind that matters of alleged breach of privilege which are broadcast are not necessarily published correctly in newspapers and in some cases are not reproduced at all in newspapers. Therefore, if we are to have two classes of privilege, as it were, it would seem that matters which are broadcast have a very good chance of escaping our notice while those which are published in newspapers can be brought before you at the earliest opportunity.

Therefore, in view of the difficulties which many of us have in promptly obtaining accurate transcripts from the broadcasting authorities, I would ask whether you could give consideration to this matter which, I believe, is one which will concern us increasingly in future.

I am grateful to the hon. Members for Tiverton (Mr. Maxwell-Hyslop) and Sowerby (Mr. Madden) and to the Lord President for what they have said. I have the feeling myself, as I approach this, that it is wrong for the House to be defeated on a technicality from pursuing a question which it might wish to do. But, on the other hand, I am the guardian of the rules of the House, and I certainly undertake to look into the matters raised by the hon. Members and the suggestion made by the Lord President.

Statutory Instruments; &C;


That the Safety Representatives and Safety Committees Regulations 1977 (S.I. 1977, No. 500) be referred to a Standing Committee on Statutory Instruments, &.—[Mr. Foot.]

Rent Act 1974 (Amendment)

3.38 p.m.

I beg to move,

That leave be given to bring in a Bill to amend the Rent Act 1974.
Many of us will deeply regret that the Labour Party's Home Policy Committee has decided to continue its vendetta against private landlords. What a stupid and short-sighted decision! Let me say straight away that the purpose of my Bill is to encourage the private landlord to provide accommodation for letting and thus to ease the problem of the young, the single, the homeless and the newly married, who traditionally use private rented accommodation but who are now finding it harder and harder to obtain.

It has been estimated that in 1975 there was a loss of at least 90,000 dwellings from the private rented sector. During the same year over 51,000 applications by homeless families for accommodation were recorded by councils in England. This compares with 28,000 in 1972, namely, approximately a doubling in three years. There must be some correlation between the tragic and rapid rise in homelessness and the continuing and sharp decline in the private rented sector.

Never, I believe, has there been such a perverse act as the Rent Act 1974. It reminds me of the Chinese saying describing the behaviour of fools:
"Lifting a rock only to drop it on one's own feet".
The Act aimed to provide greater security of tenure for the tenant, but how can there be greater security when there is no flat or house for the tenant to tenant? That is the greatest insecurity of them all. Equally, the Act purported to give the resident landlord a greater possibility to let accommodation in his own house while at the same time granting security of tenure to the tenant. But the Act is so convoluted and difficult to understand, and there are so many exemptions and exclusions within it, that the landlord does not know where he stands. Where his own home is involved he prefers to leave accommodation empty to letting part of the house to a tenant whom the landlord subsequently finds he cannot remove and whose presence considerably diminishes the capital value of the house.

Let me give one example of the complexity and convolution in the Act. Suppose that you, Mr. Deputy Speaker, were to be invited by Mr. Speaker to share a few rooms in the Speaker's House—because Mr. Speaker might feel somewhat lonely in that large building—and you were to agree to go for a trial period until the end of the Session. Suppose also that after that time you found that you enjoyed talking politics together at breakfast and that Mr. Speaker suggested renewing the agreement until the end of the next Session. The fact is that he could not get rid of you at the end of that time. You would be there as a protected tenant by virtue of having had two fixed-term tenancies. You would have been given the status of irremovability. I would congratulate you upon that, Mr. Deputy Speaker, but it would certainly not have been Mr. Speaker's intention that you should remain in that house when he first invited you to stay.

That is precisely the sort of booby trap which exists within the 1974 Act. That is why resident landlords are so chary of letting and why those in search of private rented accommodation find it increasingly difficult to obtain it.

I have thought it right, therefore, to bring forward this short Bill. It has the support of many of my hon. Friends and the hon. Member for Isle of Wight (Mr. Ross). It has as its main purpose to simplify the position of the resident land-lord and thus to encourage him to put more accommodation on the market.

The Bill will provide that three months after it has been enacted, all new tenancies where a resident landlord is letting accommodation in his own house will be exempted from the constraints of the Rent Acts unless both landlord and tenant agree in writing that the provisions of the Acts are to apply. This means that from that time a resident landlord will let to new tenants accommodation in his own home for fixed periods of time that may or may not be renewed, or for an unspecified period, at market rent and without creating security of tenure. The minimum period of notice to be given to such non-protected tenants will be 90 days.

I shall also seek to amend the 1974 Act so that a non-resident landlord with a genuine need to possess and occupy at a certain future date should, with the agreement of his prospective tenant, be able to grant a fixed-term tenancy without granting security of tenure. This could be implemented in two ways. First, there could be a mutually agreed fixed-term lease, operating within the existing fair rent arrangements. Here I would be following closely the pattern already suggested by my hon. Friend the Member for Kensington (Sir B. Rhys Williams).

The second possibility is that in exceptional cases a higher than fair rent could be justified, for example, where a landlord had to discharge mortgage repayments. In such a case the parties should be able to agree both a fixed term and a rent higher than that registerable generally. These agreements would be concluded in the presence of a rent officer who would thus be able to advise the parties on the implications and terms of the proposed agreement.

I am reminded of a tragic comment made in The Economist which read:
"People complain that housing policy has become so complicated that they no longer understand it. But imagine their complaints if they had understood it."
My suggestions would utilise a good deal of property that is currently empty because possession cannot be guaranteed at a given future date. Even if local authorities were required to rehouse tenants after the end of the fixed term, an advantage would have been gained by delaying the time when this has to happen and the maximum possible use would have been made meanwhile of the housing stock at a time when new flats and houses are not being built in sufficient numbers.

It is imperative that we help those who need private rented accommodation. I believe that my Bill would go some way to doing that.

3.45 p.m.

I rise to oppose the Bill. The hon. Member for Mid-Sussex (Mr. Renton) began with a piece of completely false logic. He said that since there had been an increase in the number of empty properties and in difficulties of homelessness since the 1974 Act was passed, there must be a correlation. I dispute that. The process of which he complains started long before 1974. I certainly know, on behalf of my constituents, that a great deal of unhappiness and misery has been saved as a consequence of the Government extending security of tenure to tenants of furnished accommodation.

It is true that fewer furnished dwellings are being advertised in the newspapers. Clearly, more vacancies will be advertised if the complete licence to evict, which existed for landlords of furnished accommodation hitherto, is reinstated. Similarly, since before 1974 the security granted to unfurnished tenancies did not extend to furnished tenancies, there was a motivation for landlords to transfer unfurnished accommodation into furnished by putting in a few sticks of furniture. This denied the tenants their security. When that device was prohibited it was clear that there would be less furnished accommodation arising from that source.

It is true that there is some misunderstanding among resident landlords. That, frankly, is less a consequence of the legislation and more a consequence of Tory propaganda, which has sought to use the private resident landlord as an excuse for urging greater freedom for landlords of the Freshwater and Stern variety, which are rife in my constituency and in many others.

If the hon. Member for Mid-Sussex is concerned about the number of empty properties, he would have done far better to be in the House when my hon. Friend the Member for Salford, East (Mr. Allaun) sought to introduce a Bill dealing with the requisitioning of empty properties. That would have dealt with the bulk of the problem, with the kind of landlord—not the resident landlord—who finds it

Division No. 127]


[3.50 p.m.

Adley, RobertBudgen, NickFairgrieve, Russell
Amery, Rt Hon JulianBurden, F. A.Fell, Anthony
Arnold, TomButler, Adam (Bosworth)Finsberg, Geoffrey
Atkins, Rt Hon H. (Spelthorne)Chalker, Mrs LyndaFletcher, Alex (Edinburgh N)
Bain, Mrs MargaretClarke, Kenneth (Rushcliffe)Fookes, Miss Janet
Belth, A. J.Clegg, WalterForman, Nigel
Bell, RonaldCope, JohnFowler, Norman (Sutton C'f'd)
Benyon, W.Costain, A. P.Freud, Clement
Berry, Hon AnthonyCrawlord, DouglasFry, Peter
Biggs-Davison, JohnCrouch, DavidGardner, Edward (S Fylde)
Blaker, PeterDavies, Rt Hon J. (Knutsford)Gilmour, Rt Hon Sir Ian (Chesham)
Body, RichardDean, Paul (N Somerset)Goodhart, Philip
Boscawen, Hon RobertDouglas-Hamilton, Lord JamesGoodhew, Victor
Bottomley, PeterDrayson, BurnabyGoodlad, Alastair
Bowden, A. (Brighton, Kemptown)Durant, TonyGow, Ian (Eastbourne)
Boyson, Dr Rhodes (Brent)Edwards, Nicholas (Pembroke)Gower, Sir Raymond (Barry)
Braine, Sir BernardElliott, Sir WilliamGray, Hamish
Brocklebank-Fowler, C.Ewing, Mrs Winifred (Moray)Grimond, Rt Hon J.
Brooke, PeterEyre, ReglnaldGrist, Ian
Buchanan-Smith, AlickFairbairn, NicholasGryils, Michael

more profitable to leave one or two flats empty in a multi-storey block with a view to selling it and enhancing its value. That Bill would have helped people who are in dire need of accommodation by providing these premises at a reasonable rent.

This Bill should be opposed because it gives a completely false impression of the nature of homelessness and of the reasons for empty properties. If the House were to pass the Bill it would strike a chill fear into the tenants of furnished accommodation who were granted security in 1974.

One of the constant problems from which furnished tenancies suffered was that formerly tenants could not use the provisions of other Rent Acts to have rents reduced or to have unsatisfactory conditions remedied by the landlord, because if they had asserted their rights, eviction would have followed as sure as day follows night. Following from that situation, other safeguards which were not available to furnished tenants until 1974 have now become available to them.

I hope that the House will have the good sense to throw the Bill out and to wait for a more worthwhile measure to be introduced by the Government, making any adjustments that are necessary and, most particularly, introducing powers to allow empty properties to be requisitioned.

Question put, pursuant to Standing Order No. 13 ( Motions for leave to bring in Bills and nomination of Select Committees at the commencement of Public Business) :

The House divided: Ayes 175, Noes 199.

Hall, Sir JohnMitchell, David (Basingstoke)Shersby, Michael
Hamilton, Michael (Salisbury)Moate, RogerSims, Roger
Hannam, JohnMolyneaux, JamesSinclair, Sir George
Harrison, Col Sir Harwood (Eye)Monro, HectorSkeet, T.H.H.
Hicks, RobertMontgomery, FergusSmith, Dudley (Warwick)
Higgins, Terence L.More, Jasper (Ludlow)Smith, Timothy John (Ashfield)
Holland, PhilipMorgan, GeraintSpence, John
Hordern, PeterMorgan-Giles, Rear-AdmiralSpicer, Michael (S Worcester)
Howe, Rt Hon Sir GeoffreyMorrison, Charles (Devizes)Stenbrook, Ivor
Howell, David (Guildford)Morrison, Hon Peter (Chester)Stanley, John
Howells, Geraint (Cardigan)Mudd, DavidSteel, Rt Hon David
Hunt, David (Wirral)Neave, AireySteen, Anthony (Wavertree)
Hunt, John (Bromley)Nelson, AnthonyStewart, Rt Hon Donald
Irving, Charles (Cheltenham)Neubert, MichaelStokes, John
Jenkin, Rt Hon P. (Wanst'd & W'df'd)Newton, TonyStradling Thomas, J.
Johnson Smith, G. (E Grinstead)Nott, JohnTaylor, Teddy (Cathcart)
Johnston, Russell (Inverness)Oppenheim, Mrs SallyTebbit, Norman
Jopling, MichaelPage, John (Harrow West)Thatcher, Rt Hon Margaret
Kaberry, Sir DonaldPage, Rt Hon R, Graham (Crosby)Thompson, George
Kershaw, AnthonyPage, Richard (Workington)Thorpe, Rt Hon Jeremy (N Devon)
Knight, Mrs JillPardoe, JohnTownsend, Cyril D.
Lamont, NormanParkinson, CecilWakeham, John
Latham, Michael (Melton)Pattie, GeoffreyWall, Patrick
Lawson, NigelPenhaligon, DavidWalters, Dennis
Le Marchant, SpencerPercival, IanWeatherill, Bernard
Lewis, Kenneth (Rutland)Peyton, Rt Hon JohnWells, John
Lloyd, IanPowell, Rt Hon J. EnochWelsh, Andrew
Luce, RichardPrice, David (Eastleigh)Whitelaw, Rt Hon William
McAdden, Sir StephenPym, Rt Hon FrancisWiggin, Jerry
Macfarlane, NeilRenton, Rt Hon Sir D. (Hunts)Wigley, Dafydd
MacGregor, JohnRenton, Tim (Mid-Sussex)Wilson, Gordon (Dundee E)
Mackay, Andrew JamesRhodes James, R.Winterton, Nicholas
McNair-Wilson, M. (Newbury)Ridley, Hon NicholasWood, Rt Hon Richard
Marten, NeilRifkind, Malcolmyoung, Sir G. (Ealing, Acton)
Mather, CarolRoberts, Michael (Cardiff NW)Younger, Hon George
Maudling, Rt Hon ReginaldRoberts, Wyn (Conway)
Mawby, RayRoss, Stephen (Isle of Wight)


Mayhew, PatrickRost, Peter (SE Derbyshire)Mr. Michael Marshall and
Meyer, Sir AnthonyShaw, Giles (Pudsay)Mr. Michael Morris.
Mills, PeterShepherd, Colin


Archer, PeterDean, Joseph (Leeds West)Jackson, Miss Margaret (Lincoln)
Armstrong, ErnestDempsey, JamesJay, Rt Hon Douglas
Ashley, JackDoig, PeterJenkins, Hugh (Putney)
Ashton, JoeDunn, James A.John, Brynmor
Atkins, Ronald (Preston N)Eadie, AlexJohnson, James (Hull West)
Atkinson, NormanEdge, GeoffJohnson, Walter (Derby S)
Bates, AlfEllis, John (Brigg & Scun)Jones, Alec (Rhondda)
Bidwell, SydneyEnglish, MichaelJones, Barry (East Flint)
Bishop, E. S.Ennals, DavidKaufman, Gerald
Blenkinsop, ArthurEvans, Ioan (Aberdare)Kelley, Richard
Booth, Rt Hon AlbertEwing, Harry (Stirling)Kerr, Russell
Boothroyd, Miss BettyFaulds, AndrewKilroy-Silk, Robert
Bottomley, Rt Hon ArthurFitch, Alan (Wigan)Kinnock, Neil
Bradley, TomFlannery, MartinLambie, David
Brown, Hugh D. (Provan)Fletcher, Ted (Darlington)Lamborn, Harry
Buchan, NormanFoot, Rt Hon MichaelLamond, James
Buchanan, RichardFraser, John (Lambeth, N'w'd)Latham, Arthur (Paddington)
Butler, Mrs Joyce (Wood Green)Freeson, ReginaldLestor, Miss Joan (Eton and Slough
Callaghan, Jim (Middleton & P)Garrett, John (Norwich S)Lewis, Ron (Carlisle)
Campbell, IanGeorge, BruceLipton, Marcus
Canavan, DennisGinsburg, DavidLoyden, Eddie
Cant, R. B.Golding, JohnLyon, Alexander (York)
Carmichael, NeilGould, BryanMabon, Rt Hon Dr J. Dickson
Carter-Jones, LewisGraham, TedMcCartney, Hugh
Cartwright, JohnGrant, George (Morpeth)McDonald, Dr Oonagh
Castle, Rt Hon BarbaraGrant, John (Islington C)McElhone, Frank
Clemitson, IvorHamilton, James (Bothwell)MacFarquhar, Roderick
Cocks, Rt Hon MichaelHarper, JosephMcMillan, Tom (Glasgow C)
Cohen, StanleyHarrison, Walter (Wakefield)McNamara, Kevin
Coleman, DonaldHatton, FrankMadden, Max
Colquhoun, Ms MaureenHealey, Rt Hon DenisMagee, Bryan
Conlan, BernardHeffer, Eric S.Mahon, Simon
Cook, Robin F. (Edin C)Hooley, FrankMallalieu, J.P.W.
Corbett, RobinHoram, JohnMarshall, Jim (Leicester S)
Cowans, HarryHoyle, Doug (Nelson)Maynard, Miss Joan
Cox, Thomas (Tooting)Huckfield, LesMendelson, John
Crawshaw, RichardHughes, Rt Hon C. (Anglesey)Mikardo, Ian
Crowther, Stan (Rothetham)Hughes, Robert (Aberdeen N)Millan, Rt Hon Bruce
Cryer, BobHughes, Roy (Newport)Miller, Mrs Millie (Ilford N)
Cunningham, G. (Islington S)Hunter, AdamMitchell, Austin Vernon (Grimsby)
Davies, Bryan (Enfield N)Irvine, Rt Hon Sir A. (Edge Hill)Molloy, William
Deakins, EricIrving, Rt Hon S. (Dartford)Moonman, Eric

Morris, Alfred (Wythenshawe)Rom, Rt Hon W. (Kilmarnock)Torney, Tom
Morris, Charles R. (Openshaw)Rowlands, TedTuck, Raphael
Morris, Rt Hon J. (Aberavon)Sandelson, NevilleVarley, Rt Hon Eric G.
Moyle, RolandSedgemore, BrianWainwright, Edwin (Dearne V)
Mulley, Rt Hon FrederickSelby, HarryWalker, Terry (Kingswood)
Murray, Rt Hon Ronald KingShaw, Arnold (Ilford South)Ward, Michael
Newens, StanleySheldon, Rt Hon RobertWatkins, David
Noble, MikeShort, Mrs Renee (Wolv NE)Watkinson, John
O'Halloran, MichaelSilkin, Rt Hon John (Deptford)Weitzman, David
Orbach, MauriceSilkin, Rt Hon S. C. (Dulwich)White, James (Pollok)
Orme, Rt Hon StanleySilverman, JuliusWhitlock, William
Padley, WalterSkinner, DennisWilley, Rt Hon Frederick
Park, GeorgeSmall, WilliamWilliams, Rt Hon Alan (Swansea W)
Pavitt, LaurieSmith, John (N Lanarkshire)Williams, Alan Lee (Hornch'ch)
Pendry, TomSpearing, NigelWilliams, Rt Hon Shirley (Hertford)
Perry, ErnestSpriggs, LesileWilson, Alexander (Hamilton)
Radice, GilesStallard, A. W.Wilson, William (Coventry SE)
Rees, Rt Hon Merlyn (Leeds S)Stewart, Rt Hon M. (Fulham)Wise, Mrs Audrey
Richardson, Miss JoStoddart, DavidWoodall, Alec
Roberts, Albert (Normanton)Strauss, Rt Hon G. R.Woof, Robert
Roberts, Gwilym (Cannock)Summerskill, Hon Dr ShirleyYoung, David (Bolton E)
Robinson, GeoffreyTaylor, Mrs Ann (Bolton W)
Roderick, CaerwynThomas, Jeffrey (Abertillery)


Rodgers, George (Chorley)Thomas, Mike (Newcastle E)Mr. Ron Thomas and
Rooker, J. W.Thorne, Stan (Preston South)Mr. Frank Allaun.
Rose, Paul B.Tinn, James

Question accordingly negativated

Orders Of The Day

Finance Bill

(Clauses 4, 15, 21; new clauses relating to value added tax, sub-contractors in the construction industry, benefits from employment (motor cars), and capital gains tax).

Considered in Committee [ Progress 9th May].


Clause 15


4.2 p.m.

I beg to move Amendment No. 17, in page 17, in page 11, leave out lines 13 to 36 and add

"all other rates of income tax shall be the same for 1977–78 as for 1976–77".
The amendment concerns the tax concessions given in the Budget to those who have to pay higher rates of income tax. If adopted, it would save £320 million, which the supporters of the amendment argue would be better spent in giving greater relief to the lower paid or in more greatly funding child benefit.

The arguments to which the Chancellor of the Exchequer has listened over the last few weeks have led him to give these tax concessions to the higher paid. He has been seduced yet again by the siren voices of the CBI. He has listened to the argument that suggests that the social contract has brought about a significant improvement in the relative position of the low paid at the expense of the higher paid. He has listened to the view that the relative rewards of mangement and professional groups have been severely eroded because of the effects of the incomes policies. Both arguments are false, and the Chancellor should not even have listened to them, let alone have been taken in by them.

Let us look at the effect of incomes policy during 1975–76, which is the only year for which we have full statistics available. We can compare matched groups and see, for example, that the earnings of accountants increased by 22 per cent. in that year while the earnings of manual workers went up by only 17 per cent. It may be suggested that by picking out accountants I am putting the argument in the most favourable terms for myself, but the sorts of increases gained by accountants in that year were not untypical. In every case the percentage increase of non-manual groups was higher than the percentage increase for manual workers.

The figures show that the first year of incomes policy did nothing to give a greater benefit to low-paid manual workers at the expense of the higher-paid. We do not have the full statistics for 1976–77, but there is no reason to believe that there has been an improvement in the position of the low paid during the past year at the expense of higher paid, non-manual workers. The reason is that the best chance of such an improvement coming about was in 1975–76—the year of the flat-rate £6 per week increase.

Generally, non-manual workers have received greater percentage increases than have manual workers. In the weeks preceding the Budget there were many rumours of tax concessions, and middle management made its voice heard. Middle managers are supposed to have been especially badly treated, but if we look at the way their relative position changed, we find that in 1975 the management group received 189 per cent. of the earnings of the lowest paid group and in 1976 that figure had risen to 195 per cent. In other words, the differential between middle management and the lowest paid has increased while the pay policy has been in operation.

We cannot look only at increases in wages and salaries, because the management group benefits also from increments, artificial regrading or promotion as a way round the pay code and fringe benefits that are not reflected in the earnings figures to which I have referred. A survey of the salaries of 7,000 executives in nearly 600 companies brought this out clearly. It showed that the average increase in executives' salaries was £508 in the year up to July 1976—when the maximum increase was supposed to be £312 a year. In that period, the average company secretary in the private sector received an increase of £803, and the report also shows an increase in the number of employees receiving fringe benefits.

In that period, certain professional groups managed to maintain or even improve their relative position in the structure of rewards. Meanwhile, the low paid suffered not just from having their wages held down but also because their overtime rates remained unchanged. They also suffered from the effects of income tax on those overtime rates and, although the low-paid workers would benefit most from a consolidation and raising of the tax thresholds beyond that which the Chancellor has offered in the Budget, nothing of that sort has been seriously offered as a way of improving their position.

It is clear that the Budget has done little to improve the lot of the lowest paid. If we take the very lowest paid, we can see what an enormous difference in wages and salaries exists in our society and that the Chancellor of the Exchequer in the Finance Bill does little or nothing to correct it.

Let us take those covered by the 43 wages councils. These set legal minimum rates of pay for about 3 million people. The Opposition weep crocodile tears about the low-paid workers and the need for an incentive to work. When I look at the wage rates for these 3 million people, I cannot understand why they bother to go to work at all. But, of course, if the Opposition spent less time weeping crocodile tears and more time asking for the Government to increase the investigation of those employers who fail to pay the minimum wages, for more charges to be brought against mean and stingy employers, and for more severe punishments to be imposed on those same employers, we might no longer regard them as crocodile tears.

Let us get back to those covered by the wages councils. After two stages of pay policy, this group's wages range from £34 at the top end to £23·35 at the bottom end of the scale. When we look at those figures, which are bad enough as they stand, we have to remember that many workers have not yet received stage 2 of the pay policy, for about one-third of the wages councils have not yet come to a decision, although it is now May, about the stage 2 settlements. But, of course, the problems of these workers are made worse, not better, by the tax system. It has become increasingly less progressive each year and is having a severe effect on the living standards of the low paid. When we take national insurance contributions into account, we see that they suffer even more from this kind of imposition.

The Chancellor of the Exchequer claims to have helped this group. Raising the tax threshold does help, and no doubt low-paid workers and the least well-off are glad of the little concession that the Chancellor has given in this Budget. Some people have been brought out of tax altogether, and some will get some boost to their income during the course of this year. But when we look at the figures given with the Finance Bill, we find that they are not among those who benefit most, as the Treasury's own figures make clear.

The costs of tax concessions in the Finance Bill to those who earn under £4,000 a year are £796 million. To those earning £4,000 a year and more, the cost of the concessions is £1,454 million. In fact, what the Chancellor has done in this Budget is to use the tax system to widen differentials and not to decrease them. This is directly contrary to the priorities as set out by the TUC and the Government—that is, to help the low paid most—at the beginning of the social contract.

If we look at what has been done in the Budget, we find first that the increases in the personal tax allowances are not enough to restore them to their real value of a year ago. Secondly, we find that the increases in the tax allowances are more than enough to offset the effects of inflation for the higher paid.

4.15 p.m.

When it comes to cushioning people against the worst effects of inflation, the Chancellor has quite deliberately rigged the Budget so that it protects the higher paid—not, I agree, the most highly paid—much more than the lower paid. Perhaps the Chancellor has reason for doing this, for the Chancellor takes first the average male earnings as being £80 a week. I shall not argue about that figure. It is possibly a little bit up or down. But he does not notice that 60 per cent of male wage and salary earners earn less than £80 a week.

The Chancellor is one of two people in the country at the moment who believe that skilled workers earn £120 a week. The first is a Mrs. King, who wrote to the Prime Minister about this point a couple of weeks ago and complained about it. The other is the Chancellor. If skilled workers are earning £120 a week, I should like to know where those skilled workers exist. There may be one or two who, because of overtime and so on, have reached that magnificent sum, but in talking to workers in the engineering industry I find that for a 40-hour basic week engineers' earnings are somewhere between £58 and £65.

Taking average weekly earnings for typical engineers during March 1977—this is including overtime and so on—a typical month goes like this: first week, £72, second week, £81, third week, £75, and fourth week, £90. That, of course, includes overtime, bonuses and so forth, but, in spite of all those efforts on the part of a skilled engineer, it is still nowhere near £120 a week. If we take miners, for example, and look at the wages of face workers, we find that the top rate is £70 a week, with surface workers and other underground workers earning considerably less than that.

In other words, skilled workers are nowhere near the figure of £120 a week which the Chancellor has dreamed up in order to justify the kinds of tax concessions that he gives in his Budget. It is no wonder that The Sunday Times reported that there had been laughter in the executive washrooms after the Budget. But, of course, there was no laughter in the toolrooms, as the by-election result at Stechford two days after the Budget no doubt showed, but apparently not clearly enough.

To sum up, this Budget does not do enough to help working people, neither skilled workers nor unskilled manual workers. By adopting this amendment and saving £320 million, the Government could better use that sum to benefit the low paid. This could be done either by raising the child benefit by about 50p a week, or, by abandoning the tax reduction from 35 per cent. to 33 per cent., raising the threshold of the child benefit—this would benefit those who most need help—rather than falling once again for the line that is shot by the CBI.

I came to listen to the hon. Member for Thurrock (Dr. McDonald) thinking that she would talk about the higher rates of tax, but instead she talked about rates of earnings. I have no criticism to make of her because of that, especially as she succeeded in keeping within your watchful eye, Mr. Godman Irvine. On the other hand, if the hon. Lady can do that, I suppose I am not debarred from making a few remarks about earnings.

I wish I had known that the hon. Lady was going to do this, because I have on my desk a table of the increase of earnings in the public sector since the Government came to power. Unfortunately, I shall have to try to remember the figure. I think I am right in saying—it might be a few points wrong—that non-manual public servants, that is to say, the Civil Service, since the Government came to power have had on average an increase of 92 per cent. in earnings, whereas in the manual grade the figure is 78 per cent. In a sense this bears out the point that the hon. Lady was making in regard to the public sector, but if she were to look at the figures for the private sector she would find a very different story.

Another ground on which the hon. Lady may be said to be putting misleading figures before the House is that she mostly quoted figures for 1975 over 1974, when, of course, there was no pay policy—

Obviously, I misheard the hon. Lady, but the point is still valid—namely, that if she examines the whole period from 1976 to 1977 she will find a greatly reducing differential.

There is another point which the hon. Lady failed to take into account. As inflation moves people through wage increases into the higher bands of tax, net incomes are much more greatly reduced. I am certain that if the hon. Lady were to present those figures in terms of net income, after allowing for inflation in the period between the time the Government came in and the present, she would find a great compression of differentials. I commend her to make that calculation. If I had known that she was about to mention the subject of earnings, I would have worked out the figures before I rose to speak.

It is a good job that the words of hon. Members who speak in these discussions seldom if ever find their way to the constituencies. I do not think the speech made by the hon. Lady this afternoon would go down very well in Thurrock. I promise that I shall not go to Thurrock and tell them what she said. She will probably remember that recently there were strikes at The Times among printers, at British Leyland among toolroom workers, and at Heathrow among engineers—strikes all concerned with differentials. A million days were lost due to the erosion of differentials because workers wished to reassert the relative position.

I know that these matters are awkward for the Labour Party. The new doctrine of mid-term unpopularity has taken over in Labour minds from the doctrine of the manifesto. Each time Labour loses a local election, it will all be put down to the doctrines of mid-term unpopularity. It is the same sort of problem faced by the Russian leaders, and the problem in their case is that there is no end to their term of office. Indeed, what worries me is that there may be no end to the term here, if the Lord President has his way. But these matters touch democracy and the hon. Lady must pay heed to them. I was told the other day that democracy is very similar to sex—when it is good it is very, very good and when it is bad it is not all that bad. That is my advice to the hon. Member for Thurrock.

The hon. Lady should listen to the people, because a large part of the unpopularity of the Labour Party is due to the compression of differentials which, under stages 1 and 2, has caused intense irritation among the workers. Whether she can find figures to prove that that is wrong or right, I must tell her that that is the fact. Compression of differentials is not only infuriating to the skilled and hard-working employee, but it is infuriating to managements, who have the remedies in their own hands by ceasing to manage Britain and going and managing elsewhere. That is the effect which the hon. Lady's policies are having on this country.

I agree with the hon. Gentleman, but let us come to the point of the amendment. We are talking of people who receive £7,000 a year-plus. We are are not talking about the toolmakers of British Leyland and others who rightly protest against the incomes policy, which has the support of the Opposition.

I can talk about anybody I like. I am not going to be told about whom I may talk. I am talking about skilled workers. I make it clear to the hon. Lady that her policies for total blanket egalitarianism are not popular in this country and that the Labour Party will commit political suicide if it persists with them. Whether the matter is rectified by removing the limits of pay rises for the higher earners or by a major realignment of the higher tax bands is not so important as that the Labour Party should realise that the British are not egalitarian-minded. I repeat that the policies pursued by the hon. Lady are leading to electoral suicide.

We are told by the Prime Minister about the golden decade that is to come in the 1980s. It would be better to describe it as stage 5 to stage 15. When the great economic miracle arrives, we are told that there will be enormous resources available from the great profits of British industry and the technological white heat, and all that rubbish, which will flow in, including the profits from North Sea oil. The impression is that the Chancellor of the Exchequer will be able to make major tax cuts in the golden decade—a decade which never actually arrives. But how is the hon. Lady intending to employ that revenue which the Chancellor intends to give away? Will she reduce the higher rate taxes, or will she spend it all on child benefit, more hospitals and more roads?

It would be helpful if, in the hypothesis of economic planning, the Labour Party were to say whether it believed that the State knew better than anybody else how to spend everybody's money, and whether it will continue to compress differentials or take money away from the higher earners—managers or skilled workers—or will let that money go back to the people to fructify in their pockets.

Does my hon. Friend not agree that it is only by cutting the taxes of those who create the earnings that we shall have any chance of reaching the golden age about which my hon. Friend speaks?

My hon. Friend makes the point on which I am about to conclude. The hon. Member for Thurrock has fallen for the fallacy of the static cake. She believes that there is a thing called the national cake, that it is always the same size, and that all one has to do is to allocate the slices to everybody and to attempt to make each slice nearly the same. But the cake is not static, and there are two things that can happen to it. The cake can either grow as the years go by or, under a Labour Government, it can actually become smaller.

The policy pursued by the Labour Government has resulted in a cake which daily gets smaller and, as the slices become more equal and smaller, everybody's slice becomes smaller. That is the reason for the unpopularity of the Labour Party. If we allow the cake to grow, not only will there be a growing slice for everybody but there will be more and more larger slices for some than for others. Judging by the hon. Lady's remarks, that simple little thought has never crossed her mind.

The way to make the cake grow larger is to employ the best managers, the best investors and the best entrepreneurs—the people who can move industry into the modern era and make investments that succeed rather than fail. That is what will result in increased prosperity.

My final message to the hon. Lady, who spoke most charmingly and delighted the House with her elegant contribution, is that until she and her party realise these things, the people of this country will be condemned to suffer a dwindling standard of living. One could term it equality of misery for all, and that is what is happening under Labour rule. I am sorry that the hon. Lady had to leave the Chamber and was unable to hear my peroration.

4.30 p.m.

It was interesting to hear the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) express such anxiety about the possibility of the Government committing suicide. It is similar to the advice recently given by the right hon. and learned Member for Surrey, East (Sir G. Howe) on public expenditure. Unfortunately, the Government accepted that kind of advice, although the right hon. and learned Member said that it took the Government three instalments to do what he had advised them to do in one.

I believe that this Budget—and I speak as a member of the Labour Party—does not do anything like enough to help working people. They have seen their standards of living cut considerably under the social contracts in the hope of winning a quid pro quo in measures to deal with unemployment, increases in social benefits, improvements in health, education provision and all the rest of it. While they have seen cuts in their earnings they have also seen cuts in the social wage and unemployment rising to an intolerable level. The Government have followed far too much the kind of orthodox Tory policies demanded by the Opposition. We shall begin to deal with the capitalist crisis in our country only by means of a totally different economic strategy.

Has it not occurred to the hon. Gentleman that companies in successful capitalist countries such as West Germany, Holland and the United States make bigger profits and pay bigger wages, that individuals and companies are taxed less, and that Holland and West Germany, for example, can afford bigger social benefits? Does he realise that by doing the things he advocates we are lessening the ability to pay such social benefits?

The hon. Gentleman should remember that West Germany has about 1 million unemployed after sending back more than 1 million immigrant workers to Turkey, Yugoslavia and elsewhere. In many debates here it has been shown, as it will no doubt be shown again, that rates of taxation in Britain compare quite favourably with those in all the other countries which the Opposition claim have such considerable virtues.

My hon. Friend the Member for Thurrock (Dr. McDonald) was right to say that this part of the Budget gives a considerable tax handout to the high income receivers, those who, with allowances—on high mortgages and the rest—are probably earning £7,000 to £7,500 a year and more. The Budget Statement often talks about "income", but we are talking here about taxable income after all kinds of allowances. If we agree on nothing else we should all agree that those with the highest level of earnings have all the advice possible from accountants and others to ensure that they receive the highest possible allowances.

The Sunday Times, looking at this part of the Budget, said on 3rd April:
"The fattest favours go to the married man, with no children, on £22,225 a year, the sort of money a director of a biggish industrial company … earns. He makes a clear £916 a year out of the Budget, a massive 9·4 per cent. increase in his take-home pay, something he could never have made out of any conceivable jump in pay under the old tax rules. And only 1·2 per cent. of this is conditional."
All this is conditional on the move from 35 per cent. to 33 per cent. These high income receivers will have three bites at the cherry. They will receive their part of the increase in the tax thresholds; they will benefit from the reduction in the standard rate from 35p to 33p, if it happens; and they will gain something from the change in the bands above £6,000.

It was suggested that my hon. Friend the Member for Thurrock was talking too much about earnings, but earnings are related to this matter. The only justification given by the Government Front Bench is that a certain number of our supporters—we have been given no estimate, and I am not concerned about the Opposition's supporters—fall within these taxable income bands. I question this very much. As even my right hon. Friend the Chancellor said in his Budget Statement, it is one thing to talk of average earnings. I am sure that my hon. Friend the Minister of State, with his statistical knowledge, will agree with me—even if no one else will—that to talk of average earnings is often nonsense. Let us take, for example, the level of average incomes last October, which we can raise to allow for any increases under stage 2 of the incomes policy. Average earnings for male workers then ranged from £53 to £76, but the so-called average earnings are very misleading.

The latest detailed breakdown, as far as I know, is in the New Earnings Survey for 1976 produced by the Department of Employment. I take manual workers first. With overtime, payments by results, bonuses and so on taken into account, the median level of weekly earnings for male manual workers was £62. This figure, which can be updated to allow for the phase 2 award, with an increase of 4 per cent. or 4½ per cent. means that 50 per cent. were earning less than £62. The third quartile were earning £75 a week, which means that 75 per cent. were earning less than £75. The highest decile were earning £90 a week, so 90 per cent. were earning less than that. We see that only 5 per cent. were earning more than £100 per week.

We are led to believe that some people were earning at least £120 a week, and political capital is made out of that, but, according to the statistics, even for non-manual workers the median was £73·9, which meant that 50 per cent. were receiving less. The upper quartile were earning £96·4, so 75 per cent. were receiving less than £96. The top 10 per cent. were averaging £123·7. There are only a tiny few in that category, a fraction of 5 per cent. of manual workers and a fraction of 10 per cent. of non-manual workers, depending on their allowances.

The other argument is that the high level of taxation in Britain produces a disincentive effect. We can only presume from that that there are executives and innovating entrepreneurs in Britain who are calculating every day that they will give not 100 per cent. effort but only 90 per cent., who do not give a day for Britain but say each morning "Let me work it out. In Germany I would pay only so much tax, so I shall work only 75 per cent. as hard as I might have done. I shall write only three-quarters of a memo instead of the whole of it. I shall attend only half the meeting instead of the whole meeting". That idea is nonsense. Are some of these people selling Britain down the river by refusing to use their capabilities to the full, by holding back 10 per cent., 20 per cent., or 30 per cent., because of the monetary aspect?

I think that my hon. Friend will agree that there has been no detailed analysis in recent years of the so-called disincentive effect and levels of taxation. I do not know of any study since the Radcliffe Report some 20 years ago. Therefore, I think that I have a right to quote what that distinguished panel of economists said on the disincentive question. They said in paragraph 149:
"But if we are asked to infer from this that the heavy rates have any special disincentive effect upon the receivers of the higher levels of income, so as to justify a shifting of the existing weight of taxation from these ranges to lower levels of income, we are bound to reply that we see no evidence that the higher income earners are specially affected by disincentive."
I agree that that was said some years ago, but I repeat that there has been no detailed study since. All that we have had is innuendo and blatant comment from the Conservative Party.

Does the hon. Gentleman agree that the disincentive to skilled workers, for example, of the combination of restrictions on pay increases and high taxation is shown by the fact that they are striking with increasing frequency? Does he also agree that the disincentive to higher-paid executives is measured not by their day-to-day reaction to their task but by the increasing number leaving this country to find jobs abroad? If the hon. Gentleman wishes to look at a survey, he should look at the one recently carried out by the chemical industry, which found example after example of evidence of increasing numbers of senior men and, even worse, skilled chemists leaving this country because they were no longer able to keep their families in the style in which they thought they were entitled to keep them, under the tax system operating here.

On the latter point, skilled and professional workers have been leaving this country since we opened up the New World 200 or 300 years ago. I do not believe that the figures were any different under the Tory Government, who bent over backwards to give massive tax hand-outs to the wealthier members of our community.

I have seen nothing in the strikes about differentials regarding taxation. The strikes have been concerned with what the workers felt were rigidities in the Government's incomes policy. Some Labour Members are opposed to that policy and have tabled a number of amendments to try to push some flexibility into it.

In my judgment the Budget does not go anywhere near far enough to help those who vote for the Labour Party at local and General Elections. That is all I am concerned about. I am not concerned about any others.

I suggest that the money which is proposed to be given to these high income earners could be better used to push up the tax threshold or to deal with some of the situations which have been created by the cut-back in public expenditure. I think that we should reconsider having a smaller band rather than a marginal rate of 35 per cent. I know that this matter was discussed last night. The Government could do something about the marginal rate of 35 per cent.

All in all, what is proposed for working-class people is insufficient. I appeal to the Minister to delete this subsection and to use the money for better purposes.

This debate is about a small section of the working population. I shall not repeat what was said by my hon. Friend the Member for Bristol, North-West (Mr. Thomas). We are talking about the higher tax rate bands. We are not talking about skilled craftsmen, because they are not paying 40 per cent. tax on any part of their income. They may bellyache justifiably about the general rate of 35 per cent. tax, but they are not paying the higher rates of tax. This debate is about page 11, lines 13 to 36 of the Bill, and nothing else.

The Chancellor in his Budget Statement said that 80 per cent. of the working population were earning between £50 and £110 a week. The Treasury's figures, backed by the Department of Employment, show that 15 per cent. of the working population earn less than £50 a week. Therefore, that leaves 5 per cent. earning more than £110 a week gross. We are concerned not with gross earnings but with taxable earnings. We are talking about those earning £7,000-plus a year.

Precisely whom are we talking about today? Who are the people earning £7,000-plus a year—£140 a week—to whom the Government wish to give a massive tax handout? They are not the skilled craftsmen in my constituency. They are certainly not any of the British Leyland toolmakers who were on strike a couple of months ago. Not one of them is concerned with this debate. It is false to bring in such people, because it makes it look as though we are seeking to cut back on the net take-home pay of millions of ordinary skilled workers. That is far from the truth.

4.45 p.m.

My hon. Friend the Member for Bristol, North-West referred to the New Earnings Survey 1976 for the general level of earnings. Part D—"Analysis by occupation"—tells us something about the occupations in which gross earnings of more than £140 a week are possible. When I look at Table 86,
"Average gross weekly earnings, hourly earnings and weekly hours Full-time men, aged 21 and over",
I could not find anyone earning £140 a week. That is because the table refers to averages. Not one occupation, manual or non-manual, achieves average earnings of £140 a week. The highest is accountants at £86 a week. That is the average.

Table 96 gives the top 10 per cent. for the various occupations. Therefore, I cast my eye down the top 10 per cent. to pick up occupations in which gross earnings are more than £140 a week, because the Government seem to believe that such people are in dire need of assistance.

Top of the list are top managers in trading organisations, who earn over £207 a week, so they are not too badly off anyway. Next come judges, barristers and solicitors, who are largely represented in the House of Commons. In fact, they are so well represented that when we have a Bill which involves the legal profession the Standing Committee cannot meet in the mornings because such Members are at the courts. That is why the Criminal Law Bill Committee can start only at 4.30 p.m. today. The top 10 per cent. of judges, barristers and solicitors are on £193 a week. That is over £140 a week. The Government think that such people are in dire need of assistance. The next in line are company secretaries, who are in receipt of £157 a week.

Going down the list, the top 10 per cent. of finance, insurance and tax specialists—they know a thing or two about Finance Bills—are earning £190 a week. They are well within the Government's guideline of £140 a week. Personnel and industrial relations officers and managers are next. The top 10 per cent. are in receipt of £156 a week. Journalists just come in. The top 10 per cent. of our friends in the Gallery are on £144 a week. I suspect that there are not too many of them in the Gallery, although most of them earn more than full-time Members of Parliament.

Architects and town planners, who make a great contribution to society, earn £149 a week. They are well within the Government's guideline for urgent assistance. These are the people on whose behalf the Treasury must make out a case for assistance.

I do not want to be accused of putting only one side. Looking down the manual workers' list in Table 96 I could not find anyone earning over £140 a week. The top 10 per cent. of toolmakers earn £91 a week. I appreciate that these are April 1976 figures and that perhaps they should be adjusted by between 8 and 9 per cent. Even so, the top 10 per cent. of skilled toolmakers would be nowhere near paying the higher rate of tax.

My hon. Friend is making an overwhelming case which demands an answer from the Government. The one group for which the highest decile is not included in those tables comprises those in receipt of unearned income. They are the people who will benefit most from this provision.

My hon. Friend is perfectly correct. I shall conclude my remarks with an example of a group which is not within the figures that I have quoted from the New Earnings Survey. Not one of the manual workers in that section pays the higher rate tax. I do not mind my speech being printed in the local Press. I do not get enough publicity. None of my constituents is affected by this higher rate of tax. There may be one or two judges and barristers lurking in the undergrowth who may vote Labour. They are right to do that, because my Government have done more for them than any Tory Government.

It has been said that Britain has a high rate of taxation. A set of statistics appears in the April edition of Economic Trends for the distribution of tax units by income for the year 1974–75. I assume that the figures are the latest available. Total income before tax on all earnings in this country—28 million tax units—was £64,000 million. The amount of tax paid on that income was only £11,000 million. That is not an astronomical sum of tax to pay for the goods and services that we require in the public sector. Those figures give the lie to the theory that Britain is a high tax rate country. It is not true. Britain is not overtaxed.

The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) talked of take-home pay. He made an excellent point an that important matter. I can give a good example. Since 1967 companies have been forced to publish the broad bands of directors' salaries. At first, companies lumped them together in the form of gross salaries. When people like myself "misused" those figures by telling their constituents about them, some companies began to publish a column for take-home pay alongside gross income. I have told the House before about the Delta Metal Company and how Viscount Caldecote received a pay increase during the pay freeze.

In its 1975 accounts, the Delta Metal Company said that two directors—I do not know which two—received take-home pay of between £12,500 and £15,000 a year. The 1976 report shows that one of those directors remains in that band. The other director has not merely moved up into the next band—that is not good enough—but he has moved to the £17,500 to £20,000 bracket. Assuming that he was on the highest level of this band in 1975 and earning £15,000 a year and that he is now on the lowest level of his present band, earning £17,500, he must have had an increase in take-home pay last year of not less than £50 a week. The company's annual report shows that clearly. The company boasts about giving figures for take-home pay. It is not breaking the law, but the hon. Member for Cirencester and Tewkesbury said that take-home pay was important.

The hon. Member said that the tax take of income was £11 billion. The latest figures show that it is forecast to be over £18 billion. Is that not what everyone is complaining about at a time when incomes are low and inflation high?

What the hon. Member says is true, but income before tax has gone up. The percentage of income tax paid out of total income is small.

Income tax represents a large part of total Government revenue. We are always being told by the CBI that company profits and corporation tax pay for our hospitals and schools. That is a lie. Recent figures from the Treasury show that corporation tax accounts for about 9 per cent. of Government revenue. Most revenue comes from income tax—from the pockets of all workers, whether they are high or low paid. Corporation tax no longer funds the social services in this country. They are paid for by income tax, straight from the pay packet.

I do not like that system. I should like it changed, but I should like the Government to take more from those earning more than £140 a week. There are only a few such people. Only about 800,000 people, or about 3½ per cent. of the working population are affected. They can afford to pay that tax.

The Finance Bill seeks to introduce concessions for certain people working abroad. The New Earnings Survey does not include such people. There is no column for members of the European Commission, for instance. Mr. Roy Jenkins, the President of the Commission, earns £5,000 a month, tax-free. He also gets expenses. There is no reason why Mr. Roy Jenkins should not say to the Inland Revenue "I am a Socialist worker. I know how to screw the workers and close the tax loopholes in the Cayman Islands. Please tax me as if I were working in Britain. I can afford it because I earn £70,000 a year gross." This man knows no distinction between take-home pay and gross pay.

The Birmingham Post published an article about this. In the first edition the article was entitled Socialist Workers". The copy in the Library is entitled "Wages of Socialism" It is written by the former editor of the Sunday Mercury, who has a column in the Birmingham Post. He says that people should not get on this public sector gravy train in a manner which abuses Britain's entry to the Common Market.

I know that I shall be called to order if I continue along those lines, but it is a good example of an occupation that is not included in the list of those earning more than £140 a week. I shall have no compunction about voting for the amendment.

5.0 p.m.

Opposition Members are strangely silent in this debate. That certainly improves the level of debate. However, that is not the reason for their silence. They are quiet because they hesitate openly to defend these tax concessions to the best-off. Even Opposition Members are not too sure of their ground and of how they would be received by ordinary people. Even when they have risen to their feet, they have managed to talk in ways which are completely irrelevant to the terms of the amendment.

As has been shown in the excellent speech of my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker), the amendment is not about skilled workers, neither their wages nor their taxes. Skilled workers will not lose a penny if the amendment is carried. In fact, the Government would have £325 million available which they could dispose of as they chose to skilled workers, semi-skilled workers or unskilled workers, all of whom have a better claim to it than those earning £140 a week and more.

The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) has now left the Chamber. He eulogised democracy. I was interested in that because he is the same hon. Member who, as a member of the Committee discussing the Industry Bill some two years ago, pointed out that he would rather be ruled from and by Brussels than by the elected Government of this country. I think that his attachment to democracy is, therefore, a little fickle.

However, it may have been improved by the fact—I regret to say this—that members of my own Front Bench are more and more seeking to carry out policies that smack of Tory policies. If, as the hon. Member for Cirencester and Tewkesbury suggested, they are committing suicide, that is the reason. "Midterm unpopularity" has nothing to do with the particular date on the calendar, but it has everything to do with the fact that too many policies are designed to help the better off and not those most in need.

The policy and the clause in the Bill about which we are complaining actually manages to give the highest benefit to those with a taxable income of £20,000 or more. The highest benefit goes to those people, in both percentage terms and absolute money terms. That is really outrageous. It would be outrageous coming from any Government, and it is both outrageous and sad coming from a Labour Government. That is not what we were elected to do. I think that my right hon. and hon. Friends on the Front Bench know that, although they will not admit it.

I shall go on for exactly as long as I choose. If the hon. Gentleman wishes to make a speech, I suggest that he tries to catch the eye of the Chair.

At the same time as we find amounts totalling £1,455 million being given to the higher paid, we are still in a situation in which a married couple can start paying tax, even after the Budget concessions, on an income of less than £24 a week. That is an extraordinary state of affairs. How can a Labour Government consider relieving those at the top of the wage and income scale at all when that is the situation at the bottom of the scale?

If there is an explanation, I should be genuinely interested in hearing it. It cannot be the incentive argument. My hon. Friend the Member for Perry Barr, in his analysis of occupations, has disposed of that. It cannot be maintained by a Labour Government that the main creators of wealth in Britain are those at the top end of the income scale. Surely all of us on the Government side of the House would agree that the wealth of the country comes from the hands of ordinary workers, and many of them are on really low incomes.

Therefore, surely the Government Front Bench will accept the amendment, having had a little longer to consider it. If they are short of suggestions as to how to use the £325 million, they should note that some of my hon. Friends and myself have tabled an amendment to Clause 21, which will also be discussed by the Committee of the whole House, which would enable the Government to give reliefs to certain people with children—widows, people with guardians' allowances and so on. Would not that be a worthy direction in which to channel some of this £325 million?

How can my right hon. and hon. Friends say that that kind of help to widows, one-parent families and the low paid cannot be afforded while at the same time they are giving massive amounts of money to people receiving £20,000 a year or more?

The man receiving £20,000 or more will get, on figures obtained through a parliamentary answer, £679 a year in tax relief. That is on the unconditional part of the Budget. If the conditional parts go through, the figure will be £799. That is almost as much as the new total personal allowance for a single person. I find it difficult to believe that my hon. Friend the Minister can have read and digested the figures in his own parliamentary answer. I shall certainly be very interested to hear his reply on the points that we are raising.

My hon. Friend the Member for Perry Barr made an equally valid point when he referred to the increased burden which is now falling on individuals rather than on companies. I wonder whether, at some stage during the passage of the Bill, my hon. Friend the Minister will comment on this matter, because it is a fact that the burden of taxation has shifted very substantially from companies to individuals. Many of my hon. Friends think that that is a very bad development.

Once again, I ask my hon. Friend the Minister to accept the amendment. It is entirely in line with the basis on which we were elected to the House of Commons. That was to achieve a shift in wealth towards working people and their families. In our election manifesto we were talking not about the top 10 per cent. of judges and barristers but about those at the lowest end of the scale, who have had the worst out of the Chancellor's Budget.

It is not for me to add to the splendid exposition by my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) in making the classic case for what I call the incentive argument. However, perhaps I may make some comments about the further arguments that can be adduced for allowing a diverse society to evolve with at least some members of that society both earning and keeping large incomes.

It is those who keep a reasonable proportion of a high income who are most of all the people who invest. It is not for me to comment, for instance, upon the splendid words that we have so often heard from the present Secretary of State for Trade, who so often reminds us that Government investment habits and intentions are more often than not mistaken, whereas if we allow the greater part of our investment to be undertaken by individuals—I am even so vulgar as to say "rich individuals"—there will be a diversity of investment decisions, which in the end is the greatest safeguard for the fullest employment of what the hon. Member for Coventry. South-West (Mrs. Wise) keeps describing as ordinary working people.

Those of us who want to see more investment, and investment in industries that will grow, and grow because they are truly profitable know that these investment decisions will be taken only by people who themselves have earned large incomes, have kept a large proportion of those incomes, and have made their individual decisions as to where they will get the best return for that money.

Would the hon. Member like to suggest that tax relief should be conditional on investment being made, and being made in this country?

No, I am so biased as to believe in freedom. I believe that the individual is entitled to make his own decision about his own money. I concede immediately that in a free society some people, if allowed to keep a larger proportion of their income, will fritter it away. There are some people who, if they have £5,000 in their hands, will put it all on the nose of a horse, and others who will go to Monte Carlo and waste it. But that is an essential part of a free society. There are even some people who may decide not to work at all, but once again that is an essential choice in a free society.

Those who are prepared to work hard and risk hard will be most inclined to value the money that they are able to keep. They will make investment decisions on the basis of where they can get the best return. The place in which they can get the best return will be the place in which the workers have the most secure jobs. That is the investment argument.

There is a deeper and more philosophical argument which supports the retention of wealth and riches for those who work and risk hard. That is the independence argument and it is, perhaps, the most important of all.

Those persons in our society who keep wealth are more capable of forming an independent view of the great issues of the country than those who are dependent upon the whims of politicians. It matters not whether the politicians are from the dreaded National Front, the respectable Tory Party, or one or another of the Socialist parties. All of us are inclined to be wrong. All of us, when we have any sort of power, are likely to abuse it. Only by allowing individuals to have enough wealth and investment rights shall we see the creation of people in society who are prepared to dispute the orthodoxies of the moment.

I shall steal a quote that I heard from someone in the City—I do not mix much with these grand gentlemen; I am not respectable enough for such contacts. This gentleman said that if we had not had the barons, we should not have had the Magna Carta. Today if we do not have rich people, we shall have a nation of people who continue to believe in whatever the current orthodoxy may be.

5.15 p.m.

In moving this amendment my hon. Friend the Member for Thurrock (Dr. McDonald) developed an interesting argument about wage differentials and their effect on an incomes policy. She said that she disapproved of the £320 million which, if the amendment is not carried, will be given to people with higher incomes. But the £320 million is not an amorphous sum that is going to some group of persons. It is necessary to break it down, and my hon. Friend did not do that. This £320 million relates to different areas.

To start with, it includes £45 million which represents the increase in the threshold for the investment income surcharge. This threshold has been increased from £1,000 to £1,500 for those under 65, and from £1,500 to £2,000 for those over 65. The investment income surcharge of 15 per cent. on top of the rate of tax will not apply until the income reaches £1,500 or £2,000, depending on whether a person is under 65 or over 65. Obviously, some of that money will go to people who do not need it. But I suggest that this is not unfair as many elderly people on fairly small incomes would, as a result of inflation, be caught by the investment income surcharge.

Most people when they retire have some sort of pension—a State pension, superannuation, or a pension from a pension fund. That is treated as earned income and is not taxed or charged under the investment income surcharge. But there are others—probably a minority—who cannot take advantage of the various pension arrangements, so they save their money. The income from these savings is not treated as earned income but is subject to the investment income surcharge. One reason for the modest increase in the threshold is that we want to help people in that category. Therefore, the £45 million will not necessarily go to those who are earning more than £20,000 a year.

I am interested in my hon. Friend's comments. Would he care to undertake to come back to the House with an amendment to meet the point that he is making? Some of us would be prepared to meet him on those terms.

I am grateful to my hon. Friend for saying that. I will not bring an amendment forward, but, nevertheless, I am grateful for what she has said. The explanation that I have just given knocks out £45 million from the £320 million that the amendment seeks to remove from the Bill.

The next tranche is £90 million that the Exchequer loses as a result of raising the higher rate threshold from £5,000 to £6,000. But if we do not increase that threshold this year we shall bring 500,000 extra persons into the higher rate of tax for the first time. I do not know who all these people are, but they cannot be terribly rich by definition. Perhaps they are managers, skilled people, or households in which the income of the husband and wife total more than £5,000. They are not necessarily those who are earning very high salaries. If the amendment were accepted and the threshold kept at £5,000, the extra 500,000 people—some of whom may be Labour supporters—would find themselves with an increased tax bill this year because inflation and perhaps increases in their incomes would bring them into a higher rate of tax.

Will my hon. Friend accept that this argument would be more convincing if in his Budget the Chancellor had fully compensated for inflation at the lowest end of the scale? Bearing in mind that husbands and wives whose income is in excess of £5,000 can opt for separate taxation anyway, would this not take them out of the higher tax band?

I doubt whether at these levels the option for separate assessment would make any difference at all. It is a fact that if the amendment were carried, 500,000 extra people would find themselves with an increased tax bill as a result of our not doing anything for them in the Budget. If my hon. Friends press the amendment to a Division and it is carried, that would be one of the consequences, even though it might not be intended.

If my hon. Friend is saying that 500,000 people might or might not be brought into a higher tax band, this must mean that for the Government to give this sort of tax hand-out other members of the community will have to pay more tax, or there will have to be a lower level of public services and a lower social wage than there otherwise would have been, which is far less beneficial to those people whom we represent.

I would remind my hon. Friend that we are talking about £90 million. I suppose that one can have a few hopitals for that amount, but it is only a fraction of the income tax reduction of £2¼ billion in the Budget. One effect of this package of reduction of £320 million is to keep 500,000 people out of the higher rate tax bands. If we do not do this during this year, about 1·8 million people will be paying at the higher rate, whereas this change will bring the figure down to 1 million. The discrepancy is caused by the 300,000 who are now in the higher rate and who will come out of it. That compares with 300,000 people who were in the higher rate band in 1974.

I am not saying that the figure of 300,000 then was right—perhaps it should have been higher—but if one compares the position then with what the amendment would produce, one sees that six times as many people-1·8 million—would be in the higher bracket. As a result of the Budget changes, the number this year will be kept to about 1 million, but that is still three times the 1974 figure. My hon. Friends have talked about a shift in wealth and perhaps an increase by three times is relevant to that.

Therefore, if one takes the £45 million that my hon. Friend the Member for Coventry, South-West (Mrs. Wise) seems prepared to give me and the £90 million which perhaps she is not, the balance is £185 million. Does my hon. Friend wish to intervene?

I was making a gesture I do not agree that the £45 million change in our amendment is unjustifiable but was prepared to accommodate my hon. Friend—to compromise.

I am grateful. As I said, the balance is then £185 million, part of which is a consequence of raising the threshold from £5,000 to £6,000. Then, of course, the higher thresholds have to be raised as well. Thus, most of that £185 million goes to those on the higher levels of tax.

It could be argued, as my hon. Friends have argued, that that money could be better spent. However, I repeat that that is £185 million out of a total income reduction of £2¼ billion. I was interested to note that my hon. Friend the Member for Thurrock did not suggest how this money should be better used. She suggested not reducing the basic rate by 2 per cent. and doing something else with all the money saved. Perhaps with that extra money we could introduce a reduced rate band, but if that is what my hon. Friend wants, she must face the fact that if there is no reduction in the basic rate, we shall not help many people in the middle and on incomes of lower than average who are clearly supporters of my hon. Friends.

Unfortunately, these are the choices that we have to make. No one says that we have done enough in this Budget for ordinary people. I wish that we could have done more. I wish that we could have introduced a reduced rate band and increased the allowances to take full account of inflation, but that would have cost an enormous amount—certainly not the £185 million or £320 million in the amendment. It would have cost far more than the total by which the Chancellor felt able to reduce tax in the Budget. Thus, in terms of the total tax bill, we are talking of very small sums.

Most of this £320 million will not go to those at the top end of the tax bracket. As a result of increasing the threshold, the top marginal rate of 83 per cent. will apply now to incomes of £21,000, not £20,000. That is not a substantial change and it is justified because of our high marginal rates.

I accept that the effective rate is the one that we should look at, but, unfortunately, people tend to consider the marginal rates instead. The marginal rate of 83 per cent. is high by international standards and in this field we must compete internationally. We have an interest in ensuring that managers come to this country when their multinational firms come to invest.

Would my hon. Friend confirm the statement in The Sunday Times of 3rd April that someone on £22,225 a year will save £796, plus £120 if the basic rate is reduced from 35 to 33 per cent.? That is over £900 a year.

The figures may be correct and, taken in isolation, they seem rather horrific, but one must consider the amount involved in relation to the total tax bill. We want a tax system that is fair to most taxpayers, including those on average and below average incomes. That would cost far more money and £185 million would make no dent in the problem.

To reassure his hon. Friend the Member for Bristol, North-West (Mr. Thomas), perhaps the Minister will tell him by how much the tax bill of the person he quoted went up as a result of the first two Finance Bills introduced by the Chancellor in 1974.

I could not answer that question and I do not think that it is entirely relevant to my hon. Friend's point.

We have had long debates about the advantage of a reduced rate band over reducing the basic rate by 2 per cent. so perhaps I may give some indication of the cost. A reduced rate band of 25 per cent. on the first £1,000 of taxable income would cost £2·2 billion, which is almost equivalent to the £2¼ billion by which my right hon. Friend reduced taxation in his Budget. A reduced rate band of 30 per cent. on the first £750 of taxable income would cost £870 million and a reduced rate band of 20 per cent. on the first £500, as suggested by my hon. Friend the Member for Thurrock in the Budget debate, would cost £1·5 billion.

When one considers that £45 million of this reduction is on investment income surcharge and £90 million is to keep 500,000 people out of the higher rates, I think that my hon. Friends will agree that the remaining £185 million would not make much contribution to solving the problem. In terms of the whole Budget package, £320 million is not a large sum. We wish that we could have reduced the basic rate by more and increased the allowances by more, but that would cost an enormous sum and at the moment it is not possible. Therefore, if my hon. Friends wish to press the amendment, I ask the Committee to reject it.

5.30 p.m.

It would be wrong to let this occasion pass without saying how much we welcome the debate. Naturally, we do not welcome the amendment. We welcome the debate as it provides a good insight into the way in which the minds of hon. Members in the heart of the Labour Party are working. When we look at amendments of this sort on the Order Paper we are led to ask where those who have tabled them have been all this time. They are talking about a world that is passing away, or one that has passed. In a sense they are the parliamentary epigone, the pensioners of the past. They are museum pieces.

The arguments that have been put forward this afternoon, which the Minister has rightly put down, do not relate to the problems that the country or the ordinary people face. We all recognise the plight of the lower paid. They are grotesquely over-taxed. They are more highly taxed in income terms than they would be in any other country in the free world. However, it seems that the hon. Member for Thurrock (Dr. McDonald) is suggesting that the way to help the lower paid is to victimise middle income groups by increasing their taxation. That is what lies behind the amendment. To imagine that by victimising that group we shall help the lower paid is a proposition so bizarre that it is almost past understanding.

The hon. Gentleman is making a valiant attempt to defend the Labour Government while some of my hon. Friends are attacking them. The hon. Gentleman uses the word "victimising" to symbolise trying to take money from the very rich to give to ordinary people. He describes those who support that approach as epigones and people from museums. Is the focal point of the hon. Gentleman's argument that we should give more to those who have and take from those who have not?

The hon. Member for Thurrock spoke in a way that did not really become her of the need for punishment of those on higher incomes. I am arguing that if we want to help the lower paid the way not to do it is to victimise or punish those who are higher paid, which happens to be about 2 million in this country.

My hon. Friend the Member for Thurrock (Dr. McDonald) was not talking about punishing the higher paid or anyone else in respect of receiving, wages. My hon. Friend was advocating that we should punish employers who pay below the statutory legal minimum as set down by wages councils. She was speaking against the prosecution policy, which is, in effect, that employers should not be prosecuted for these flagrant breaches of the law. That was my hon. Friend's reference to punishment.

I take note of what the hon. Lady says. I shall check that in Hansard. If "punishment" is the word we are using, it is the punishment of the tax system that is hitting the lower paid. It is taking intolerable chunks out of low incomes and middling low incomes, which is something that I wish Labour Members below the Gangway would use more energy arguing about. If they adopted that approach, they would obtain a better deal for the workers.

In the past hour or so of debate we have witnessed a predictable attack. It has been so predictable that it has represented almost an authentic part of the old Britain that many people hoped had passed. It has been an entirely predictable attack on a gigantic cadre of trained, honourable, exceptionally hardworking and devoted people. As we know, there are about 2 million of them.

The Minister has said that last year there were about 1·8 million people in the higher paid bracket. However, the attack has spread over a wider number than that. There are about 2 million people in the £100 to £200 a week bracket. The attack on these people is an attack on management.

Some hon. Members on the Labour Benches below the Gangway may welcome the fact that we are approaching a management catastrophe. Every piece of evidence in every newspaper and daily and monthly publication brings it home that we are facing such a catastrophe. It is evident that the management cadre and the skilled worker cadre are totally demoralised. They are thinking, if they can, of voting with their feet. They are worrying with an intensity that cannot be right for output and production about their living standards and how to meet the bills. At the same time the hon. Member for Thurrock and others have argued that in some way they are being helped by the Budget.

Labour Members below the Gangway say that the management and skilled worker cadres have done better than manual workers. That defies the latest survey in The Times, namely, the national management salary survey showing that managerial pay rose by 1·8 per cent. last year compared with an average rise of 11·8 per cent. for other workers. The £6 or the £4·50 was not the average pay increase or the average earnings increase. In fact, 11·8 per cent. was the average whereas the average for management was 1·8 per cent. That is a colossal fall.

The figures show that for many managers and those in the middle and higher paid groups there has been a fall of over one-third in their net purchasing power and take-home pay. These are the people who have come under attack and faced the indignation of Labour Members below the Gangway. Those hon. Members have claimed that there has been more help in the Budget for those people. If they analysed the facts, they would find that there has been very little net help.

According to some calculations, management is supposed to have gained in money terms although not in real terms. That is as a result of lower taxation on higher incomes. However, against that we must set increased national insurance contributions. There was a large increase for those earning £100 a week, for example. They have had to pay higher rates, increased fuel bills, increased petrol prices, increased vehicle excise duty, more expensive bank loans, more expensive car use and the fact that interest-free loans will be taxed next year. Commuter fares have also been increased.

Against that background we believe that there should be an improvement. It is said that the Budget does not harm these people and that it seeks to restore incentives, but the idea that there has been an improvement is absurd.

If Labour Members think that they can treat the management cadre in this country in such a way, they have failed to learn not only from experience in this country but in the Soviet Union and practically every other country. No other country would dream of treating its skilled workers and managers as we propose, let alone in the manner proposed by some Labour Members.

What increase in national insurance contributions has there been for anyone with an income of over £145 a week?

Division No. 128]


[5.39 p.m.

Allaun, FrankColquhoun, Ms MaureenHeffer, Eric S.
Atkins, Ronald (Preston N)Cook, Robin F. (Edin C)Koyle, Doug (Nelson)
Atkinson, NormanCowans, HarryHughes, Robert (Aberdeen N)
Bennett, Andrew (Stockport N)Edge, GeoffHughes, Roy (Newport)
Bidwell, SydneyFletcher, Ted (Darlington)Jeger, Mrs Lena
Buchan, NormanFowler, Gerald (The Wrekin)Jenkins, Hugh (Putney)
Canavan, DennisGarrett, John (Norwich S)Kelley, Richard
Carmichael, NeilGould, BryanKilroy-Silk, Robert
Cohen, StanleyHayman, Mrs HeleneKinnock, Neil

while the £150 a week man will pay another £3·54. That is the effect of the adjustment of national insurance contributions from 6th April.

I was about to say that the debate has highlighted the catastrophic damage that has been done to management, but perhaps that is an exaggeration. The truth is that the debate has done catastrophic damage to the prospects of the Labour Party. That is why I began by welcoming the debate. I am glad that certain things have been said by Labour Members below the Gangway.

The reality is that workers do not spend their time in nail-biting envy of management and management rewards. They are not envious in that way of the differentials of those with greater responsibilities and higher pay. That is not the way in which they think. That is the way of thinking of the small museum group on the Labour Benches.

Most working people know that good management needs good pay. I suspect that most working people would argue that far greater rewards are required for responsibilities and skills than anything remotely offered in the Budget. That is why we shall be moving amendments on those lines. That is why my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) will be spelling out the real case in later speeches in Committee if he catches your eye, Mr. Godman Irvine.

That is why we welcome the half hearted defence of the Budget on the part of the Minister of State. That is why we believe that it does not begin to recognise the real needs of working people, the lower paid, management and productive capacity.

Question put, That the amendment be made:—

The Committee divided: Ayes 53, Noes, 205.

Lamond, JamesMiller, Dr M. S. (E Kilbride)Skinner, Dennis
Latham, Arthur (Paddington)Miller, Mrs Millie (Ilford N)Spearing, Nigel
Lee, JohnNewens, StanleyThomas, Ron (Bristol NW)
Loyden, EddieOvenden, JohnThorne, Stan (Preston South)
Lyon, Alexander (York)Richardson, Miss JoWilson, William (Coventry SE)
McDonald, Dr OonaghRoberts, Gwilym (Cannock)Wise, Mrs Audrey
Madden, MaxRooker, J. W.
Marshall, Jim (Leicester S)Rose, Paul B.


Maynard, Miss JoanSelby, HarryMr. Russell Kerr and
Mikardo, IanSilverman, JuliusMr. Martin Flannery


Abse, LeoHarrison, Walter (Wakefield)Perry, Ernest
Archer, PeterHatton, FrankPrice, William (Rugby)
Armstrong, ErnestHealey, Rt Hon DenisRadice, Giles
Ashton, JoeHenderson, DouglasRees, Rt Hon Merlyn (Leeds S)
Bain, Mrs MargaretHooley, FrankRoberts, Albert (Normanton)
Bates, AlfHooson, EmlynRobinson, Geoffrey
Bean, R. E.Horam, JohnRoderick, Caerwyn
Beith, A. J.Howell, Rt Hon Denis (B'ham, Sm H)Rodgers, George (Chorley)
Bishop, E. S.Howells, Geraint (Cardigan)Rodgers, Rt Hon William (Stockton)
Blenkinsop, ArthurHoyle, Doug (Nelson)Ross, Stephen (Isle of Wight)
Boardman, H.Huckfield, LesRoss, Rt Hon W. (Kilmarnock)
Booth, Rt Hon AlbertHughes, Rt Hon C. (Anglesey)Rowlands, Ted
Boothroyd, Miss BettyHunter, AdamRyman, John
Bradley, TomIrvine, Rt Hon Sir A. (Edge Hill)Sandelson, Neville
Brown, Hugh D. (Provan)Irving, Rt Hon S. (Dartford)Sheldon, Rt Hon Robert
Brown, Robert C. (Newcastle W)Jackson, Colin (Brighouse)Shore, Rt Hon Peter
Buchanan, RichardJackson, Miss Margaret (Lincoln)Short, Mrs Renée (Wolv NE)
Callaghan, Jim (Middlelon & P)Jay, Rt Hon DouglasSilkin, Rt Hon John (Deptford)
Campbell, IanJohn, BrynmorSilkin, Rt Hon S. C. (Dulwich)
Cant, R. B.Johnson, James (Hull West)Small, William
Carter-Jones, LewisJohnson, Walter (Derby S)Smith, John (N Lanarkshire)
Cartwright, JohnJohnston, Russell (Inverness)Snape, Peter
Castle, Rt Hon BarbaraJones, Alec (Rhondda)Spriggs, Leslie
Cocks, Rt Hon MichaelJones, Barry (East Flint)Stallard, A. W.
Coleman, DonaldKaufman, GeraldSteel, Rt Hon David
Conlan, BernardLamble, DavidStewart, Rt Hon Donald
Corbett, RobinLamborn, HarryStewart, Rt Hon M. (Fulham)
Crawlord, DouglasLestor, Miss Joan (Eton and Slough)Stoddart, David
Crawshaw, RichardLever, Rt Hon HaroldStott, Roger
Crowther, Stan (Rotherham)Lewis, Ron (Carlisle)Strang, Gavin
Cryer, BobLipton, MarcusStrauss, Rt Hon G. R.
Cunningham, G. (Islington S)Lomas, KennethSummerskill, Hon Dr Shirley
Davidson, ArthurLuard, EvanTaylor, Mrs Ann (Bolton W)
Davies, Bryan (Enfield N)Lyons, Edward (Bradford W)Thomas, Jeffrey (Abertillery)
Davies, Denzil (Llanelli)Mabon, Rt Hon Dr J. DicksonThomas, Mike (Newcastle E)
Davis, Clinton (Hackney C)McCartney, HughThompson, George
Deakins, EricMacCormick, lainThorpe, Rt Hon Jeremy (N Devon)
Dean, Paul (N Somerset)McElhone, FrankTierney, Sydney
Dell, Rt Hon EdmundMacFarquhar, RoderickTomney, Frank
Dempsey, JamesMacKenzie, GregorTorney, Tom
Doig, PeterMackintosh, John P.Tuck, Raphael
Douglas-Mann, BruceMcMillan, Tom (Glasgow C)Varley, Rt Hon Eric G.
Dunn, James A.McNamara, KevinWainwright, Edwin (Dearne V)
Dunnett, JackMagee, BryanWalker, Harold (Doncaster)
Eadie, AlexMahon, SimonWalker, Terry (Kingswood)
Ellis, John (Brigg & Scun)Mallalieu, J.P.W.Ward, Michael
English, MichaelMeacher, MichaelWatkins, David
Ennals, DavidMendelson, JohnWeetch, Ken
Evans, Fred (Caerphilly)Millan, Rt Hon BruceWeitzman, David
Evans, Ioan (Aberdare)Mitchell, Austin Vernon (Grimsby)Welsh, Andrew
Ewing, Harry (Stirling)Molloy, WilliamWhite, Frank R. (Bury)
Ewing, Mrs Winifred (Moray)Moonman, EricWhite, James (Pollok)
Faulds, AndrewMorris, Alfred (Wythenshawe)Whitlock, William
Fitch, Alan (Wigan)Morris, Charles R. (Openshaw)Wigley, Dafydd
Foot, Rt Hon MichaelMorris, Rt Hon J. (Aberavon)Willey, Rt Hon Frederick
Ford, BenMoyle, RolandWilliams, Rt Hon Alan (Swansea W)
Fraser, John (Lambeth, N'w'd)Mulley, Rt Hon FrederickWilliams, Alan Lee (Hornch'ch)
Freeson, ReginaldMurray, Rt Hon Ronald KingWilliams, Rt Hon Shirley (Hertford)
Freud, ClementNoble, MikeWilliams, Sir Thomas (Warrington)
George, BruceOakes, GordonWilson, Alexander (Hamilton)
Gilbert, Dr JohnOgden, EricWilson. Gordon (Dundee E)
Ginsburg, DavidO'Halloran, MichaelWoodall, Alec
Golding, JohnOrme, Rt Hon StanleyWoof, Robert
Gourlay, HarryPadley, WalterWrigglesworth, Ian
Graham, TedPalmer, ArthurYoung, David (Bolton E)
Grant, George (Morpeth)Pardoe, John
Grant, John (Islington C)Park, George


Grocott, BrucePavitt, LaurieMr. James Tinn and
Hamilton, James (Bothwell)Pendry, TomMr. Thomas Cox
Harper, JosephPenhaligon, David

Question accordingly negatived.

I beg to move Amendment No. 18, in page 11, line 14, leave out '£6,000' and insert '£9,000'.

With this we may take the following amendments:

No. 33, in page 11, line 14, leave out '£6,000' and insert '£8,000'.

No. 25, in page 11, leave out lines 27 to 36 and insert—
'Part of excess over £9,000Higher rate
The first £2,00040 per cent.
The next £2,00045 per cent.
The next £2,00050 per cent.
The next £2,00060 per cent.
The remainder70 per cent.'
No. 32, in page 11, leave out lines 27 to 36 and insert—
'Part of excess over £8,000Higher rate
The first £2,00040 per cent.
The next £2,00045 per cent.
The next £2,00050 per cent.
The next £2,00055 per cent.
The next £2,00060 per cent.
The next £5,00065 per cent.
The next £5,00070 per cent.
The remainder75 per cent.'.

By way of preliminary I would make two remarks. The first is that I have for long felt that the problem of income tax goes right across all the ranges of income. I wish to make that clear at the outset. In this group of amendments I am not singling one particular group for tax reductions. I believe, and, had I had the opportunity to be called last night, I would have made this point, that this problem covers the whole range, from those on the lowest income scale, where we are all now familiar with the differentials between those in work and those out of work, to those on average earnings in work, to the widows and pensioners and all the scales below the level of income about which we are talking in this amendment.

Looking at differentials I feel that there is now a serious problem for the foreman and supervisor, whom I classify to some extent in the category of management and about whom I shall be talking mainly in this amendment. I have increasingly found that this attitude is taken in my constituency and among every company that I have talked to. I have looked at some alarming figures prepared by companies in my constituency showing that, when we combine the comparative increase in pay that foremen and skilled workers receive and the massive effect of present levels of tax upon it, there is alarmingly little difference between the net take-home pay they receive and that of unskilled workers and people with fewer skills.

Unquestionably this is a serious problem which has still to be tackled. I make this point simply to emphasise to those, Labour Members, who may feel like rebutting this amendment by saying that we are singling out a special category, why I believe this general level of direct taxation exists right across the scale. I hope that we shall continue to make our attack right across the scale. It is not just management which is suffering, but the amendment, nevertheless, pinpoints a major problem which I think it right to identify.

As the Minister of State made clear in his reply to the last amendment, the cost of dealing with this particular group proportionate to total tax relief is very much less than it is for dealing with the other problem to which I have just referred. The reason the amendment is so important is that we are witnessing the start of a great deterioration in the morale of British management. Indeed, I believe that the crisis of morale is already upon us, especially among what one might describe as the cream at all levels.

If we do not remotivate the best of British management at all levels we are sunk. The issue is as serious as that. I hope to show that those who are most at risk are those in management whom we as a country can least afford to lose.

The second preliminary comment I wish to make is by way of commenting on the remarks of those hon. Members who supported the last amendment. Of course, I understand that they have an ideological commitment to an egalitarian society. The two sides of the House of Commons will never agree about that. I would plead with those hon. Members to understand that we as politicians have to be concerned with the practical and real world of business and commerce and, indeed, of the public sector as well.

Most people outside politics—clearly a very large proportion of the British population—simply do not share the political conviction of hon. Members opposite or their ideological commitments. The plain fact, as we have seen in the local election results last week, is that many people are fed up with the constant process of having more of their income taken in tax and spent as politicians wish to spend it. What they are concerned about is doing the best for their companies, making the best use of their skills, getting the rewards which they believe are appropriate for the sacrifices that they have made in their earlier life at the expense of acquiring skills and qualifications, and providing for themselves and their families.

If we do not recognise that fact, we shall demotivate them and we shall also lose the very best among the young, who will simply go abroad because, as the figures clearly show, this country is now taxing them much more heavily than any of our competitor countries. Many young people are free to take their skills to those other countries. In fact, this point was well put last year by the Financial Secretary, who frequently pointed out the way that differentials between the highest paid and the lowest paid in this country, if we take after-tax incomes, are now very much narrower than those in practically every other country, not just our serious industrial competitors, but every other country, including the Communist world. I believe that differentials are far too narrow. The Financial Secretary and I are probably at one in recognising that the real problem is that differentials have now got to their present state.

Amendments Nos. 18 and 25 go together and Nos. 33 and 32 go together. My own view is that we should press Nos. 33 and 32. But the significance of Nos. 18 and 25 is that to some extent they indicate the erosion in tax over the past three years among the group about which I am concerned. I would say to Labour Members that it is not just a question of looking at the past year alone. What one has to look at is the trend of massive inflation over the past three years.

Amendments Nos. 18 and 25, curiously enough, are modest, because they are well below the level at which many of the tax thresholds should be if one simply takes into account erosion in terms of inflation. Starting from the situation in April 1973, the time of the last Conservative Budget, the starting point should be not £9,000 but £9,745. A Treasury answer on 4th April confirmed that. At the 70 per cent. level the starting point should be over £23,000 and not, as in the amendment, £19,000. At the top rate of 83 per cent. rather than £21,000, as in the present Budget the figure should be over £38,000. These figures clearly demonstrate the erosion in net take-home pay of the management group directly caused as a result of inflation.

Equally, the amendments are modest when one looks at the international situation. Of course, this is also relevant with regard to the high level of taxation on the lower paid, but we have to recognise that the lower paid are not likely to be enticed abroad because of their particular skills, whereas management will be. It is relevant to consider the international comparisons.

I simply take two countries, Germany and the United States, to compare with ourselves. Again, according to a Treasury answer on 24th January, our 83 per cent. maximum rate begins at £21,000. In Germany the maximum rate is 56 per cent., starting at an equivalent of £64,000, and in the United States it is 50 per cent., starting at the equivalent of nearly £30,000. Those international comparisons clearly indicate that this group of amendments is very modest.

I come to the reasons why it is necessary to press this case this afternoon. If we have been listening properly to the whole range of our constituents, all of us will know that the problem of the erosion of net take-home pay and living standards of managers, whether they are what one might describe as front line—the foreman and the supervisor—middle managers, or senior managers, is now becoming one of the main areas of complaint. MI of us will know from the statements by the chairmen of many British companies—it is remarkable how this has become a common feature of such statements over the past few years—that more and more boards of directors are having to direct an undue proportion of their time to the problem of how to motivate their managements, how to keep them in this country, how to see that they are adequately rewarded, and how to keep them doing the jobs they are supposed to be doing.

6.0 p.m.

We all know from the many surveys which have been carried out, from the head-hunter surveys and from those dealing with the emigration of British management—and this includes surveys by the Government's own Professional and Executive Recruitment Service—that the group that has suffered most in terms of a reduction of living standards over the last three to four years is middle and senior management. People at the lower and average income levels have begun in the last six to nine months to suffer for the first time a real reduction in their living standards.

But the plain fact is that management, and particularly higher management, has suffered over the last three years a reduction in living standards of about 25 per cent. in real terms. Now a simply staggering increase in gross pay is required to restore these living standards, and one of the major factors which has required this staggering increase is that tax now takes so much of the extra marginal income above £.10,000.

Of all the surveys I have seen on the subject that recently produced by the Opinion Research Centre is the best, and I wish to refer to it. It is the best because it is the most comprehensive and the most scientific. Rather than looking simply at groups of management, such as the British Institute of Management members, as some surveys have done, the ORC survey has looked across a broad range in Great Britain. It started with a sample of 106,000, which enabled it to come down to a group of 1,800 managers, and it studied them in depth.

It discovered that we are talking here about more than 1 million key decision takers in the country. In the debate on the last amendment the Minister quoted the figures of those who would have been brought into the higher tax bands had the adjustment not been made in the Budget proposals. He quoted the enormous increase in the figures of those who over the past three years have been brought into the higher tax bands. So we are talking about a comparatively small proportion of the total population, but about a very large number of people, and they are the key decision takers. They are to be found in the industrial and the commercial sectors and, to be fair, in the public sector.

Let us consider the results of the survey. Those results should seriously concern every hon. Member, because if we are to get the economic growth and performance we seek, we depend on this group of people, and nothing that we as politicians do will make the difference that those people can make if they are properly motivated.

Almost 100,000 managers are serious enough about leaving Britain to have inquired about jobs abroad or about the regulations. More than 500,000 managers would consider taking a job abroad. What is particularly worrying about this aspect is that the majority who are really serious and who may carry out their intentions are among the young.

Those in their 30s and 40s face other difficulties which may prevent their ultimately fulfilling their intentions. I have in mind such factors as children at school. But among the young who do not have these problems the level of desire to seek jobs abroad is truly frightening. I heard today of a company which is being audited by six young chartered accountants aged between 23 and 24. Five of them have said that they are being attracted by offers abroad at this moment. Accountants at that age are among the better paid of our managers, and yet five out of six of this group are seriously considering leaving the country.

I am worried that if they go abroad and see the attractions of the net take-home pay levels and the living standards that they can enjoy there, and if they marry there and have children, it will be extremely difficult with today's tax rates to attract them back to this country.

My hon. Friend is rightly concentrating on middle management, but does he agree that his arguments apply with equal force to the professions, particularly the medical profession? There we are suffering severe difficulties in persuading the most able members of that profession to remain in this country.

I have been using the word "managers" as a shorthand term, but, of course, we are talking about the middle and higher income groups, and they include the professions. Those are the skills that are so easily translatable abroad, and it is not surprising that we are losing people in that group as well.

A further result of the ORC survey is that about a fifth of the total work force of managers is doing less work outside normal hours than used to be the case. I am sure that the explanation is that pay is no longer a satisfactory reward and that therefore these people are seeking their rewards elsewhere. That means less commitment to the company, to the professional firm, or to the hospital for which they work.

One in four managers—which means well over 250,000—now say that it is not worth accepting promotion because of the effect of taxation on pay increases. I have talked to a number of such people in my constituency and around the country who have given me practical examples of where they have been offered promotion at what looked like an attractive increase in gross salary but where, after taking account of the cost of moving and the net addition to their take-home pay, they discovered that it was not worth while. This has become an increasing problem at home.

There is a strong reluctance, therefore, among these people to accept posts in other parts of the country, even with substantial gross increases in pay. I am sure that many companies could testify to the difficulties they have had in getting mobility among their managers, especially in this country, and in attracting them back from overseas for this very reason.

Does my hon. Friend agree that in trying to attract executives to another part of the country companies have to give very high salary increases, which distort the salary patterns within companies?