I beg to move amendment No. 1, in page 14, leave out lines 21 and 22.

With this, it will be convenient to discuss amendment No. 2, in page 14, leave out lines 25 to 27.

I ask the Committee to consider these amendments, which make changes to the Government's provisions regarding the married couples allowance. As I think the Committee knows, the Finance Bill will abolish the married couples allowance and replace it in due course with a children's tax credit.

When the Chancellor announced that change in his Budget speech, he rather typically failed to make it clear that the children's tax credit will not come into effect until April 2001. So the Government have the use of about £2 billion in public money for that year. In addition, the children's tax credit will cost the Government about £650 million less than the married couples allowance, which they are abolishing. The Government are removing an allowance that is familiar and upon which many people rely and replacing it a year later with a cheaper allowance.

Moreover, the Treasury Select Committee report describes the new arrangement as "complex". Much of the evidence that the Committee received about this section of the Bill points to problems in administering the children's tax credit, the fact that it will create a high marginal tax rate as it is withdrawn up the income scale, and that it generally represents a further complication in an already over-burdened tax system.

We shall undoubtedly debate the tax credit in greater detail at another time, but it is relevant to discuss it now because of the Government's switch. They are abolishing an allowance that has been a familiar and valued part of the tax system and upon which many people have relied and are replacing it with an untried, complex arrangement that will be less generous and will go to different people.

Will the right hon. Gentleman comment on the observations of Mr. David Brodie, the director of the charity TaxAid, who, after the Budget, said:

"The children's tax credit is a generous arrangement, reducing most taxpayers' liabilities by £416 a year or £8 a week, which is double the value of the married couple's allowance"?

If the hon. Gentleman had told us a little more about what the charity sector is saying, he could have referred to its critical remarks about the withdrawal of dividend tax credits, something that will hit charities extremely hard when the transitional arrangements end.

Although people may welcome additional money for children and families, that does not excuse this measure, whereby the Government are taking away money from childless couples and, as I shall now outline, hitting particularly hard people who are coming up to retirement age. That is the subject of the amendments.

In his Budget speech, the Chancellor asserted:

"Today's pensioner couples will retain the married couples allowance."—[Official Report, 9 March 1999; Vol. 327, c. 183.]

He hoped to convey the impression that, although married couples allowance is being abolished for most taxpayers, it is being retained for pensioner couples, but that is not the case. If people become 65 after 5 April next year, they will not receive the married couples allowance. That date is entirely arbitrary. If people were born on 5 April 1935, they will receive the allowance in old age; if they were born a day later, on 6 April 1935, they will not receive the allowance. Being born a day later makes a difference of £500.

The Red Book, which fleshes out the details of the Budget, contains a section on pensioners and an entire chapter called, "Building a Fairer Society". Nowhere does it explain the unfairness and say why pensioners will not receive the married couples allowance if they reach retirement age after next April. It does not explain also why a one-day difference in birth dates can determine whether one receives a £500 tax credit. That measure is not fair or equitable; it is a good illustration of stealth taxation. The apparent extension of married couples allowance to pensioners will, in fact, apply to a smaller and smaller number of people as they die off or get divorced.

Does my right hon. Friend agree that people in their late 50s and early 60s, especially those on low incomes, who were born after that magical date, are being particularly discriminated against because there is virtually no likelihood that they will be able to have children if they have not already got them, so they will not be eligible for the child tax allowance, and nor will they be eligible for the older married couples allowance?

My hon. Friend makes a good point. Many of those people who are coming up to retirement will have looked forward to relying on the married couples allowance. Almost by definition, they cannot now alter their working arrangements, work overtime or get a different job to make up for the income that they will lose. That is the extent of their vulnerability, and yet, out of the blue, comes a Budget that will remove an important and valued tax allowance which they were looking forward to, when it is already too late for them to make alternative arrangements.

Will the right hon. Gentleman give way?

I will when I have completed the point. That blow is the latest in a series of blows that the pensioner and saving communities have suffered at the hands of the Government. In the Government's first Budget, there was a £5 billion a year raid on pension funds as a result of the withdrawal of dividend tax credits. Therefore, the same people who are now coming up to retirement have already seen the value of those pension funds reduced.

Does the hon. Gentleman still wish to intervene?

My simple argument is that every change in tax interferes with people's tax planning and confounds their plans. That aspect is not limited to the change that the right hon. Gentleman was criticising, or to people over 65. Anyone, such as myself, who might have benefited from the married couples allowance now cannot plan towards that, but that is the nature of changing tax.

The point that I was making was that pensioners are especially vulnerable. If the hon. Gentleman were to have his tax allowances removed suddenly, he might be able to get a different day job to make up that reduction, but that option is not open to the people who are hit by clause 28.

As I was in the middle of saying, this is not the first blow that those people have suffered. Not only is the withdrawal of dividend tax credits from their pension funds draining £5 billion a year into the Treasury, but many of those people made regular savings into personal equity plans, and all that was stopped from April 1999. PEPs have been replaced by individual savings accounts, which are more expensive, more complicated and less advantageous. Therefore, a series of hammer blows has landed on the very people who are hit by the clause.

Everywhere, the Government have hit pensions and savings, and the next generation of pensioners will now have their personal allowances reduced or abolished as well.

If the right hon. Gentleman is so concerned about future planning, will he explain the rationale behind his Administration's halving of the value of the married couples allowance over the period when he was a Minister?

It is one thing to reduce an allowance and quite another to abolish it. Moreover, it is a clearly different thing to reduce an allowance in the context of a tax-reducing strategy. We brought the level of personal and direct taxation down in successive Budgets. Against that background, it is fully justified to reduce some allowances and increase others. However, the Government are relentlessly increasing the burden of direct taxes on, and reducing the allowances of, the most vulnerable people in the tax-paying community.

Will the right hon. Gentleman tell the Committee the value to that same pensioner group of the cut in the married couples allowance made by the Conservative Government, and will he explain why he thinks that that was worth less?

We have a proud record of reducing personal and direct allowances and, by the end of our term of office, all sections of the tax-paying population were better off. We are now witnessing an assault, not only on the general tax-paying public, but especially on people who are less able to order their affairs to compensate for what the Government are doing. There is no better illustration of that than clause 28.

Will the right hon. Gentleman give way?

No. I have given the hon. Lady her chance. She may well have an opportunity to make a speech if she catches your eye, Sir Alan.

It is not only the married couples allowance that is being abolished. There is also the widows bereavement allowance. The Committee may need reminding that, attached to the married couples allowance, is the separate but linked widows bereavement allowance, which is paid to widows for up to two years after suffering that bereavement. A Government press release on Budget day made the following erroneous claim:

"Widows will be more than compensated for the loss of this allowance by the proposed Bereavement Payment in the Welfare Reform and Pensions Bill."

The Chancellor has now admitted that that was incorrect. There is an opportunity for the Government to apologise to the House of Commons through the Committee rather than relying on a letter that was written to the Select Committee on the Treasury, in which it was admitted that the press release was incorrect.

The Government made quite a seriously misleading statement. It is now clear that widows in retirement will be suffering from more than the withdrawal of the married couples allowance, because they will not be in receipt of either the widows bereavement allowance or the replacement bereavement payment. I quote from the relevant section in the Select Committee's report, which states:

"The Chancellor agreed to write to us, and in their note the Treasury stated that the bereavement payment 'will not generally be available to people over pension age'."

That contradicts the statement that was made on Budget day. I hope that the Minister has made a note of that. It would be at least a courtesy if she could correct the misleading and untruthful statement that was made on 9 March.

Talking of correcting misleading statements, I am not sure whether the right hon. Gentleman made a slip of the tongue, a Freudian slip or a confession. He said a few minutes ago that the Conservatives had a proud record of reducing allowances. That is certainly what they did, and many people are worse off because of that.

If I made that slip, I can correct it. We reduced the burden of taxation by reducing rates and preserving, and in some cases increasing, allowances. The effective burden of taxation borne by the groups that we are discussing was reduced during our period in office. I am grateful to the hon. Gentleman for giving me the opportunity to clarify that point.

The widows bereavement allowance is an important issue. It was not mentioned anywhere in either the Chancellor's statement or in the section in the Budget report to which I have referred. Again, we have an example of stealth taxation. With this Government, we have always to peal away the obfuscation, and, in this instance, the downright untruth, to get at the reality of what is happening to taxpayers.

On the very date that I have been talking about, 6 April 2000, the value of state earnings-related pensions will be halved for spouses. That is to say that a widow, for example, will be able to inherit only 50 per cent. of the SERPS entitlement built up by her husband. That is a pre-existing decision; it was taken many years ago. However, I am grateful for an early-day motion, which has been signed by a number of Labour Members, which points out that the Government, until this year, were sending out, again, misleading information to those making inquiries about the value of the SERPS entitlement for spouses. It is yet another blow that, on the very day that a widow's SERPS entitlement is halved, the Government are removing the entitlement to the widows bereavement allowance. That will be the subject of other amendments when the Bill reaches another Committee. Those amendments will ensure that pensioner couples continue to receive married couples allowance, as I believe that they are entitled to do. Many of them rely on it, and Conservative Members believe that they should have it.

Clause 28 is the worst clause in the Bill and I am delighted to speak to this pair of Opposition amendments relating to future pensioners. I must say, Sir Alan—if you will forgive me this anecdote—that I remember clause 28 of another Bill from some years ago causing huge demonstrations and attracting a vast amount of media attention for those who claimed to be defending an alternative life style. This clause 28 has attracted little media attention. There is little public interest, and certainly no demonstration to defend the interests of many millions of married people who will lose a benefit that has existed, in one form or another, since the end of the first world war.

Nobody in the Chamber could have failed to notice the certain amount of mischievous reporting, which has been filling some of the media, on an alleged debate in my party on the question of welfare and the balance between the free market and the state. The debate on these amendments offers me a particularly good opportunity to state my position, which is that welfare should never lie principally with either the state or the free market. By far the most important element of welfare is the family—historically and even today.

I look forward to the next debate, in which we shall discuss how the clause relates to people who are rearing children. I do not want to make the same points twice—you would rightly call me to order, Sir Alan—but the statistics I shall offer then concern the stability of the relationships of married and unmarried people. They point strongly to the efficacy of marriage as an institution in terms of keeping a man and a woman together.

Will the hon. Gentleman give way?

In a moment.

There are a range of reasons for believing in the importance of marriage. In the context of a Finance Bill, the state, as well as the people concerned, has an interest in that stability.

Before the hon. Member for Colne Valley (Kali Mountford) makes the point that was bound to be made—someone always leaps up to make it—I am obviously not suggesting that people will rush off to get divorced because of a change in legislation. However, before I reply to the point that I suspect she is about to make, we should hear her make it.

I thank the hon. Gentleman for giving way. I had not thought of making a point about divorce, so I thank him for raising the issue in the Committee. I was going to ask him what evidence the Conservative Government gathered during their period in office that family stability had been affected by tax decisions. Are not there all sorts of demands on families? People do not base decisions about family stability on tax allowances.

I suggested that the hon. Lady might make exactly that point, and she has done so.

Unlike my right hon. Friend the Member for Wells (Mr. Heathcoat-Amory) on the front row—[HON. MEMBERS: "He was the hooker."] My right hon. Friend was a sportsman, but I will not make a point about that. I do not defend the cuts that we made in the married couples allowance, but the evidence on stability falls into two halves. For the second half, the hon. Lady will have to wait for a couple of hours because I shall deal with it under the next amendment as it relates to couples with children. It is very detailed and comes from statistics provided to me by the House of Commons Library.

Overwhelming evidence shows that marriage is the critical factor in stability of relationships between men and women. The second half of the hon. Lady's question lies—

Order. I have allowed the hon. Gentleman to preface the introduction to his remarks, and he has done so in a fairly wide-ranging manner. I am duty bound to the Committee to nudge him back into the narrow area covered by the amendment, which deals with the age-related married couples allowance. We cannot have a general debate about the married couples allowance.

I well understand that, Sir Alan. I was responding to the generalised question that the hon. Member for Colne Valley asked me, which was what evidence I had that the tax system influences people's behaviour. I must reply briefly to that, if I may—

Order. As a result of my generosity in the first place, the hon. Gentleman made remarks which attracted the attention of the hon. Member for Colne Valley (Kali Mountford). He must not go further down that track. I have now decided that he has gone far enough, so I suggest that he returns to the narrow terms of the amendment.

In that case, the hon. Lady will have to wait for the next debate.

Is it fair that a married couple who are only four or five years from retirement, who have gone through their working lives without drawing benefits, having never been out of work, should be told that they are to lose the married couples allowance? They may both have contributed all the way through, or the husband may have done so while the wife had a gap for child rearing—or the other way round, as is increasingly common. That benefit is worth several hundred pounds a year and the couple may have been relying on it as part of their retirement income.

At the risk of arousing your ire again, Sir Alan, may I say that, as my right hon. Friend the Member for Wells said, that comes as part of the framework of changes in provision for those approaching retirement—a framework that has challenged the contributory principle. Why should those approaching retirement not think that, having paid into the system all throughout their working lives, it is only fair that the Government should not move the goal posts, as clause 28 would do? Why should they not say, "We have paid our taxes. We are approaching retirement. Why should only those who are already retired on the date shown in the clause benefit from the allowance?"

The hon. Gentleman and I share a belief in the institution of marriage. However, he makes a point about the stability of marriage in a debate on a group of amendments which deals specifically with allowances for pensioners. Is there any evidence to suggest that there is instability in pensioners' marriages?

The hon. Gentleman allows me a second bite at the question. I congratulate him on his clever phrasing, which I think, Sir Alan, allows me to reply. The short answer is that I have seen no clear statistical evidence of that. Most of us come to this House because we believe that the signals that Members of Parliament send matter. It seems extraordinary that we should tear up a signal which, since 1918, successive Chancellors of the Exchequer — two were from the Liberal party and others were from the Labour and Conservative parties —have believed to be very important. That signal is that the House believes that marriage matters and that, in this context, people approaching retirement deserve some recognition through the tax system of the fact that they are married.

Will the hon. Gentleman explain to the Committee why the right hon. and learned Member for Rushcliffe (Mr. Clarke), when he was Chancellor of the Exchequer and announced a further reduction under the Conservative Government of the married couples allowance, described it as an anomaly in the system that we did not need?

Bluntly, I do not agree with my right hon. and learned Friend.

The hon. Gentleman voted for it.

The hon. Gentleman is right to remind me that I voted for it. At the time, I was in the middle of a rebellion on another family issue, as some hon. Members may remember. The married couples allowance is not an anomaly. I believe that that was the wrong decision, and a wrong justification for the reduction. The allowance has existed since 1918, and I am delighted that the Conservative party as a whole—Conservative Members on the Front Bench and on the Back Benches—will shortly be able to vote against this measure. I hope that the Liberal Democrats will join us in the Lobby.

This issue is not just about signals or the importance of marriage: there is a practical point. I said at the beginning of my speech that the most effective form of welfare is that provided within the family. We all know of couples—many of us have examples in our own families—one of whom looks after the other. It is more often the wife who looks after the husband, but sometimes it is the other way round.

Order. I am not sure that the hon. Gentleman is taking on board my signals. The debate is about the age-related married couples allowance. He is making a speech that would fit more naturally into the clause stand part debate. I ask him for the final time to keep within the terms of the amendment.

I was about to mention nursing care for the elderly. The key point is that if the husband looks after the wife or the wife looks after the husband, the little bit of extra income that is currently provided by the married couples allowance may assist in ensuring that that unpaid, unrecognised, undervalued carer feels able to go on. Any reasonable person would accept that several hundred pounds a year might, at the margin, make the difference, and enable a wife or a husband, who, for a number of years has looked after an elderly or less fit spouse, to go on.

Specifically within the terms of the amendment, does my hon. Friend acknowledge that the majority of registered disabled people are over retirement age? The Government want to drive them into work as part of their reforms, but that is neither here nor there. Many of the people to whom my hon. Friend refers have severe disabilities and will be particularly hard hit by this measure.

Yes, indeed. My hon. Friend will remember the touching testimony of the shadow Secretary of State for Social Security, our hon. Friend the Member for Chingford and Woodford Green (Mr. Duncan Smith). For many years, his mother nursed his elderly father, who was suffering partly as a result of the wounds he acquired during the war. She was unpaid and unrecognised by the benefit system, but she nursed him through it. Such couples will lose the married couples allowance.

It is extraordinary that, after all these years, we should remove this cover. It is particularly sad and arbitrary for the Government to say that people who have already retired are different from those who are about to retire. The aim of my right hon. Friend's excellent amendment is to ensure that married couples who retire in the future get the same benefit as people who are currently retired, the value of which the Government have recognised by leaving it in place for people who reach 65 before 2000–01.

We should consider the financial impact of what I consider to be an unfortunate wrecking amendment. The Government propose to scrap an allowance that has already been discredited by the Opposition, who have continually reduced it and who accept that it should go. The question is, what is the best strategy for phasing it out? The Government propose to retain the allowance for those who are currently pensioners, but if the amendment were passed, it would never be phased out: all new pensioners would continue to enjoy the benefit. Given that Britain has an ageing population, the Exchequer would be spending money that could otherwise be spent on families, and on children in particular. The point of the clause is to transfer expenditure to families in need.

Did not the hon. Gentleman stand for election on the platform that his party was committed to not raising taxes? During the general election campaign, the leader of his party said that there would be no tax rises at all. Is not the abolition of the married couples allowance, particularly for pensioners, simply an increase in income tax? How does the hon. Gentleman justify that?

The hon. Gentleman refers to a myth that is being peddled continually. The commitment was for income tax not to be increased. I was not going to mention this, but we have reduced income tax rates to 23p and l0p, which is a remarkable achievement.

How can the hon. Gentleman say that his Government have reduced income tax? The abolition of the married couples allowance will mean that an ordinary married couple will pay an extra £197 in income tax. How does the hon. Gentleman square the two statements?

The commitment was to reduce the rate of income tax, and that is what we have done—as well as reducing the rate of corporation tax, and other taxes. It would be bizarre for any Government to say that they would never increase any taxes. Apart from anything else, what would they ever do? It is unbelievable that any sensible person could interpret anything that the Prime Minister has ever said as meaning that we, as a new Government, would never raise taxes. That is a farcical idea.

I have been distracted. Let me return to the narrow arena of the amendment. We have spent about £2 billion a year on the married couples allowance, an increasing proportion of which is used by people over 65 as they grow older. The question is whether that should continue—as it would if the amendment were passed—or whether the money should be targeted on families who are in greater need, as our general strategy suggests. I hope that the Opposition will answer this question at some point today: where would they find the money to fund that increasing share of the £2 billion? Would they take it from impoverished families with children, or would they tax it? Do they entirely dismiss the Government's overall strategy of directing money towards families to enable them to work and to care for their children?

The hon. Member for Canterbury (Mr. Brazier) mentioned family values. He also referred to "child rearing", as though he was talking about chicken farming. The Government's strategy is intended to help families: that is the whole point of it. As for "signals", does the hon. Gentleman not agree that the signal that the Opposition are sending the community in the amendment is "Do not get married until you are 65"? The amendment poses the danger of a sudden surge of people marrying at 65.

rose—

rose—

Here they come! They are surging ahead! They are surging everywhere!

Surely, according to the hon. Gentleman's logic, the tax incentive that the Government have given to 65-year-olds will lead them to contract serial marriages and start families again.

That is obviously the signal that the hon. Gentleman has received. No doubt he intends to go off and do that, but I do not think that such a move would be rational. I think that he should reconsider his personal position.

I shall not try now to enter into subject matter that will be dealt with in later debates, on amendment No. 8, on clause 28 stand part, and on the principle behind the married couples allowance, except to say that the comment of the hon. Member for Canterbury (Mr. Brazier)—that one must support the married couples allowance if one is in favour of the family and marriage—simply does not stand up. The idea that the tax system must support marriage and the family is a complete fallacy. There are 101 other policies that would be more effective in supporting marriage and the family, and I shall describe some of them in our later debates. However, I felt that I should make those preliminary remarks, so that my subsequent remarks flow logically.

As my hon. Friend the Member for Northavon (Mr. Webb) said, in his intervention in the speech of the hon. Member for Canterbury, there is no evidence that the married couples allowance has increased the stability of marriage among elderly people. I have figures, which the hon. Member for Canterbury did not have with him, from "Social Trends 1999", suggesting that, over the years—as the previous Conservative Government phased out the married couples allowance—the stability of marriage among elderly groups has, if anything, increased. In 1971, the divorce rate among those who had been married for 30 years or more was 9 per cent. In 1996, the percentage had gone down to 5 per cent.

Therefore, if anything, the stability of marriage among the elderly has increased.

Although I know that this may test the hon. Gentleman's intellectual capacity, is not the logic of his statement—given the figures that he presumably has at his disposal, showing an increasing number of marriage break-ups among people in their 20s and 30s—that reducing the allowance encourages marriage break-ups among younger and middle-aged people?

I was going to deal with exactly that point, and to say that, because of that very point, one has to interpret the figures with some care. I therefore take on board the hon. Gentleman's first point. However, the figures do not support the second point that he was trying to make—that reduction and phasing-out of the married couples allowance has increased the divorce rate.

Is it not the case that, although the value of the married couples allowance under the previous Government was reduced for people under 65, its value was maintained throughout that period—as it was in the current Government's first year—for people over 65? Do the figures therefore prove the case one way or the other?

I had planned to deal with the relevant point behind the hon. Gentleman's remarks—the need to ensure that we protect that group of elderly pensioners. We have to ensure that people in that group have some offsetting allowances, to ensure that they are not hit by the proposed measure. It is an important point, and the most germane argument in relation to this group of amendments.

There is a case for keeping the married couples allowance for new pensioners, to protect them from taxation increases. However, if we can protect that group within the Government's overall package, it would be satisfactory to phase out the married couples allowance for everyone, so that the tax system might be simplified. So far, although the Government have probably not gone far enough to compensate pensioners, they have included in the Finance Bill the right types of measures, on which we should hope to build in Committee.

The children's tax credit does not apply to this group of amendments—although, judging from his comments, the hon. Member for Canterbury might like them to.

What does the hon. Gentleman mean by that?

The hon. Gentleman seemed to be suggesting that people would try to exploit the children's tax credit by having large families, and that the Government were trying to create such an incentive.

You have the wrong Member.

I apologise; I was referring to the hon. Member for Arundel and South Downs (Mr. Flight).

I want to highlight the Bill's measures that will protect that group of pensioners. Clause 21 provides an over-indexation of personal allowances for the elderly. It does not completely compensate them; it is a partial offset, but it is the right measure.

4.30 pm

The Liberal Democrat alternative Budget, which was produced before the Chancellor's statement, proposed a simpler tax system that got rid of allowances such as the married couples allowance and increased the basic personal allowances. So, in this regard, the Government are taking our ideas on board, or at least sharing the same ground and acknowledging that we need higher personal allowances that protect pensioners and other low-income groups from a higher tax burden.

Is it not the case that raising allowances as prescribed in the Liberal Democrat manifesto would cost some £15 billion? Can the hon. Gentleman say briefly where the money would come from? Would he raise income tax or what?

I shall not try your patience too much, Sir Alan, but the document that we published prior to the Budget set out all the details and costings. Those costings included the abolition of the married couples allowance.

Our position today is totally consistent with what we said before the Budget. We shall vote against the amendments and support the Government tonight because they are going in our direction and increasing personal allowances to protect vulnerable groups. They could go further, and I am sure that we shall debate that later.

For example, clause 19 could have provided even more protection for elderly people. The Government introduced a lop starting rate of income tax, but they have not applied it to savings. Is that not introducing an anomaly? They could have taken the opportunity to provide further protection for current and future pensioners who will be hit by parts of clause 28.

We call on the Government to ensure that pensioners are not only protected from the abolition of the married couples allowance, but targeted as a group that need more resources. In previous Finance Bills, the Government penalised pensioners through, for example, the abolition of dividend tax credit. I hope that the Committee will return to that point as we certainly intend to put the Government on the spot. More than 300,000 pensioners have lost an average of £75 a year as a result of that policy.

The Government could go further. In previous debates, my hon. Friend the Member for Northavon spoke about our policy to increase the basic state pension by £3 a week for those aged over 75 and by £5 a week for those aged over 80. That would target resources on those most in need, as poverty among elderly people is highly correlated with age. It would ensure that those groups were protected from the abolition of the married couples allowance, and more than compensated. They would be far better off with that package of policies.

We shall table amendments to the Welfare Reform and Pensions Bill when it is considered on Report, proposing that policy package. I believe that we already have the support of the right hon. Member for Birkenhead (Mr. Field), a former Social Security Minister. I shall be interested to see whether Conservative Members sign up to those amendments and vote with us on welfare policy. If they really are interested in protecting pensioners, they will back our policy, which is the best way of using taxpayers' money to alleviate poverty among the elderly. We look forward to them supporting us as that would be in line with their arguments this afternoon.

The Liberal Democrats reject the amendments because they would prevent an overdue reform of the tax system. They would prevent a reform that would simplify the tax system and free up resources that could be used elsewhere properly to promote the family, targeting resources on children, and giving the Chancellor the resources to tackle pensioner poverty.

I listened carefully to the Chancellor's presentation of his Budget. He did not say that the married couples allowance would be retained for current pensioners, but abolished for future pensioners. He used the general word "pensioner". As was reported in the media at the time, he gave the distinct impression that the intention was to retain the married couples allowance as a tax measure to help support pensioners in their retirement.

I spoke at a large meeting in my constituency the week after the Budget, at which I made clear the reality of the Chancellor's proposals. Not surprisingly, there was considerable annoyance in my audience at the Chancellor's Orwellian use of language to secure misleading headlines. I call on the Government to make their intentions and proposals clear, if nothing else. The Budget speech is too important for half truths.

The Chancellor also argued that there was a trade-off. He said that, although it was a good thing to abolish the married couples allowance—because it had got so untidy when it came to deciding who qualified for it, with many contorted questions about whether people were married or divorced, and so on—the trade-off was to be the new child credit.

More Orwellian language was used when it was stated that the proposal was all about the Government's pro-family policy. However, the word "family" does not now mean mother, father and children, as it used to. It now refers to children with perhaps one parent: if there are two parents, it does not matter whether they live together.

It is axiomatic that retired people do not have families. What I said in my intervention in the contribution from the hon. Member for Croydon, Central (Mr. Davies) was mainly in jest, but I was trying to illustrate the very real point that an argument can be made for changing the married couples allowance tax benefit to the new child credit. Such a change would have a redistributive element—the less well-off would be better off and the better off less well-off—but, overall, the benefit to families would be about the same.

There is a fairness to that argument that echoes the Chancellor's favourite phrase about fair tax policies, but there is no fairness in simply removing a substantial tax benefit for elderly people that is not to be made up elsewhere. The figures show that, for people over 75, the married couples allowance is worth more than £5,000. That is quite substantial, and the value of the allowance after tax is quite significant.

I want to expand on the point that has been made already about planning. People plan for their old age. Perhaps many hon. Members have not yet reached the age when they start such planning, but I certainly have. People work out their pensions and savings in building societies so that they can plan their financial arrangements for old age. With the introduction of stakeholder arrangements, the Government are exhorting more and more people to make such provision, but it is too late for people aged 65 to make changes, to begin new careers and take out new insurance policies, and so on.

I submit that a change such as is proposed requires much longer notice than a year. People retiring in the next 10 years, say, will not be able to make up for the tax loss that this change will inflict.

The reduction in the SERPS widows benefit has already been cited. That was announced some 13 years ago, but hon. Members will be aware that hardly anyone knew about it. The Department of Social Security often gives incorrect advice, but the real problem is that people were not aware, even after 13 years, of the changes to that benefit.

A principle of the tax system is that it should not change all the time. The Government made no mention in their election manifesto that they were going to abolish the married couples allowance for retired people. That abolition is part of a considerable and growing attack on the great rump of pensioners in the middle of society. When I listened to the hon. Member for Croydon, Central, I could not help feeling that he was saying that ageism is now politically correct among Labour Members. He seemed to feel that there was something virtuous in deriving pleasure from taxing older people more. Their pension funds are being taxed. They are being stopped from having tax credit on dividends if they pay no tax. The Government are removing tax benefits on insurance policies. Is all that some sadistic attack on elderly people? It seems to be thought that it is politically proper.

My main criticism is that the provision is devious and misleading. It was not made clear, and pensioners are not being compensated for it. The top-up to pensions guarantee applies only to people who have minimal savings or none. The measures will simply make the great mass of older people less well off in their retirement.

Pensioners are not stupid. In New Zealand, Ministers are frightened even to address public meetings because pensioners have been physically assaulting them. The Government seem to think that pensioners are soft prey and that the media are not interested. However, in my experience, the senior part of British society has rumbled the sum total of the fiscal attacks that the Government are mounting. The matters covered by the two amendments are, in the Chancellor's language, unfair and unjust, and the way in which they were announced was downright misleading.

My hon. Friend the Member for Croydon, Central (Mr. Davies) was quite right to say that the amendment is a wrecking amendment. If the official Opposition were serious about amending the clause, they would have suggested some reasonable future date. If they disagree with our date, why not suggest another proper date two or three years hence? The Tories are simply opposed to the resolution. They simply do not like the abolition of the married couples allowance. Rather than be straightforward, they have produced a wrecking amendment without talking about the age group that would be affected by it.

Will the hon. Lady give way?

No, I shall make my point.

A couple who had had no married couples allowance would suddenly receive it on their retirement date. That makes no logical sense. In his considered speech, the hon. Member for Kingston and Surbiton (Mr. Davey) rightly noted that, if we are to find resources to fund measures that I think are the right ones, money must be found sensibly and logically in a way that fits with the Government's overall strategy. The age group is critical in that sense.

If we are to support children, we must be consistent. Opposition Members really want to talk about families, but they must consider the effects of their nonsensical amendment. It makes no sense to encourage marriage in retirement, but not the rest of the time. Tory Members will surely vote against the clause at the stand part stage. So why spend the Committee's time on discussing this amendment? I find it all very confusing.

rose—

rose—

Give way to the good-looking one.

My hon. Friend must not try to guide me. The hon. Member for South Holland and The Deepings (Mr. Hayes) asked first.

The hon. Lady is very kind and I am extremely flattered.

I do not support the abolition of the married couples allowance for anyone, but does the hon. Lady acknowledge that the nub of the amendment is that younger married people will at least be able to make alternative provision in their many years together? Elderly married people simply do not have that opportunity. Someone of 61 or 62 who is looking forward to retirement simply does not have enough years left to make the kind of alternative private provision that will make up for what the Government are taking away. That is the salient point.

The logic of what the hon. Gentleman says is the same as that behind what I have been saying. If he believes that people need an adjustment time in which to make their financial arrangements, why does he support the amendment? It would not achieve that end; it would simply wipe out our attempts to get rid of the married couples allowance. I do not believe in a married couples allowance.

I do.

People get married—and divorced—for all sorts of reasons, but not for tax incentives. That argument is irrelevant.

Will the hon. Lady give way?

I think that the hon. Member for Canterbury (Mr. Brazier) asked me first, but I wanted to complete my point first.

indicated dissent.

In that case, I give way to the hon. Member for Buckingham (Mr. Bercow).

Will the hon. Lady tell the Committee when and where she informed the voters in her constituency that she opposed the married couples allowance, and would take every opportunity to try to get rid of it?

The hon. Gentleman knows that the proposal was made clear in the Chancellor's fine speech.

We also had a green Budget, which Conservative Governments never even tried to achieve. Under Conservative Administrations, people were never given a six-month opportunity to consider the direction that the Government should take. That argument is nonsense. [Interruption.] I cannot believe that the hon. Member for Buckingham did not read the green Budget.

I have always made it clear that we should support children, but the amendment goes down the wrong line. It would affect pensioners. It was right for the Government not to remove allowances from people who have already had the allowance and made their retirement arrangements on that basis. To remove their allowances would have been harsh and wrong, this year, when people have not had a chance to consider their arrangements.

If Opposition Members were serious about what they say that they are trying to achieve, they would have specified a date in the future—but their amendment is nonsense, and I cannot possibly agree with it.

A few other spurious measures have been discussed in the debate. The one that horrified me most was the idea of a 14-year timetable for the changes in the state earnings-related pension scheme. Why did not the Conservative Government make proper arrangements when they made the changes in 1986? It is a disgrace that they did not do so, and people could not make proper arrangements for their retirement.

It is a bit rich for Opposition Members to complain to the Committee today about SERPS, and to say that people need time to make proper, considered arrangements for their retirement. People were never given any information in the first place, and now the Labour Government are having to pick up the pieces and put things right.

The issue was debated at length in the Standing Committee on the Welfare Reform and Pensions Bill, and the arguments remain the same. The Opposition Members on the Committee at least had the decency to apologise for their Government's mistake in not administering the change in SERPS properly.

The hon. Lady and I served together on that Committee. Will she follow her logic through and think for a moment? She is berating us for publicising something insufficiently 14 years ago, yet the interval until the change comes through is less than the interval associated with the clause. Even if the changes were published to the heavens, it is far too late for people to make provision.

The hon. Gentleman's comments might make sense if his party had ever done anything about the change in the first place. In some cases, we now have only a matter of months in which to deal with the change that people are facing. We are having to go back and think about ways of compensating people who made decisions based on the SERPS arrangement in 1986, and were not made aware of the change. Given that they left us with such a fiasco, it is a bit rich for the Tories to start arguing about proper time being allowed for changes in people's tax arrangements so that they can make proper provision for the future.

Surely, as we have made the decision, it is better to be clear about it. We are being clear about it today, and people can make their decisions for the future. The hon. Member for Kingston and Surbiton made some valid points about how to deal with compensation for people's changed arrangements and ensuring that they can make proper arrangements for the future. We can debate at length later in the Bill's passage how to make such provisions but this amendment would not achieve any of them. Conservative Members are being disingenuous in their remarks.

Sir Alan, I assume that we will not get a clause stand part debate and that you will therefore allow us to range a little wider than normal on the amendment.

I hope that I am always generous in allowing Members to speak to amendments, but I cannot be over-generous. We must not go outside the rules of order. This is about age-related married couples allowance. I hope that the hon. Gentleman will not provoke me too much. I cannot say whether there will be a later debate.

Thank you for that advice, Sir Alan.

Clause 28 abolishes the non-age-related married couples allowance from April 2000. Unfortunately, the Chancellor has seen fit to compensate some people by a child tax allowance to be introduced one year later. People who would have been eligible for married couples allowance, whether elderly pensioners or not, will have to suffer for a whole year without any form of compensation. That enables the Chancellor to retain about £1 billion that he would otherwise have had to pay out in allowances.

In his Budget speech, the Chancellor deliberately duped the public when he set out his reasons for abolishing married couples allowance. He claimed:

"It is in fact a tax credit paid at the same flat rate to married couples, single parents and unmarried parents living together."— [Official Report, 9 March 1999; Vol. 327, c. 182.]

We know that that is not true because it is the additional personal allowance that is available to unmarried and single people, and that is being abolished as well.

As my right hon. Friend the Member for Wells (Mr. Heathcoat-Amory) said, not only is the additional personal allowance being abolished, but the reliefs that go with it. Widows bereavement allowance and relief for maintenance payments, which are both available to elderly pensioners and others, are being abolished. It is an especially mean abolition because widows should particularly be helped a little by the tax system.

The elderly married couples allowance will still be available for people aged over 65 until 5 April 2000, but there is an anomaly in that provision. The Government's Welfare Reform and Pensions Bill, and all their other social security legislation, provides that women can retire at 60. If they wish to retain the married couples allowance for retired people why should not the allowance be retained at least for women aged over 60? Will the Paymaster General consider amending the Finance Bill so that women aged over 60 can claim the additional allowance? I am pleased to see her nodding assent.

indicated dissent.

If the Minister is not nodding assent, she is going against the tenor of all the social security legislation.

The hon. Gentleman should check the qualification criteria for the married couples allowance. He will find that the statement that he has just made to the Committee is incorrect. I strongly advise him not to pursue that line of argument because he has made an error about who qualifies for it.

I am grateful for that clarification, but I have here the Bill, as published, and refer the Paymaster General to clause 28(2), which states:

"Subsection (1) (reduction where neither spouse is aged 65 or over)—shall cease to have effect."

Subsection (3) of the clause continues:

"In subsection (2) (reduction where either spouse is aged 65 or over)—"

Paragraph (a) in that subsection states:

"for 'is at any time within that year of the age of 65 or upwards' there shall be substituted 'was born before 6th April 1935'."

According to my calculations, that applies only to people aged over 65, but I am willing to have the matter clarified.

Order. I hope that the hon. Gentleman will focus on the two lines in between that he did not quote; they are the ones that are relevant to the amendment.

I hesitate to disagree with you, Sir Alan, but, as I understand it, the amendment applies to lines 21 and 22—I am reading from the amendment. The lines that I quoted are lines 21 and 22 of clause 28(3)(a), which state:

"for 'is at any time within that year of the age of 65 or upwards' there shall be substituted 'was born before 6th April 1935'."

I do not want to enter into a dispute with the hon. Gentleman, but as I heard it, he read out clause 28(2) and then went on to refer to subsection (4). I do not dispute that what he has just read is the text of subsection (3)—that is the subsection that we are discussing.

Thank you, Sir Alan. I do not want to dwell on the matter and I thank you for your advice. It seems to me that the wording of the Bill is clear, but, if I am wrong, no doubt the Paymaster General will correct me when she winds up the debate.

Is the hon. Gentleman now advocating same-sex marriage? I understood that it took two people—a man and a woman. Given that fact, what he has said seems nonsensical. Is he not simply saying that we will move the whole date forward by five years for everyone?

As the entire social security system—and every other similar system in this country— is predicated on the basis that women can retire at the age of 60 and men can retire at the age of 65, if one wants to deal with retired people by giving them a special, additional married persons allowance, it would make eminently good sense to allow women who retire at 60 to be able to claim that allowance. Obviously, the hon. Lady and I have different opinions on that matter and we shall not agree.

I am grateful to my hon. Friend for trying to negotiate the details of the issue with Labour Members, but does not the absence of any logical basis in the Government's treatment of the issue prove what we know? The issue is not about consistency with other Government policies, or about ethics; it is simply a grubby bid to save a little bit of money for the Exchequer. That is the rationale. Why does not the Paymaster General give up the unequal struggle and admit it?

My hon. Friend is too generous to the Government. The measure is not merely a grubby deal to save some money; at the same time, it claims to benefit pensioners—something that could be done much more effectively.

There is no doubt that elderly people approaching retirement have been severely disadvantaged by the measure; they will have no time whatever to build up their finances to compensate for the loss of the allowance. That is so typical of the Labour Government; they tend to hit people at the bottom of the income scale. We have seen that time and again. It is grossly unfair because those people—of all members of society—do not have the time to work overtime to make up their pensions to provide for themselves when they eventually reach retirement age. It now seems that women will be encouraged to work an additional five years—from the age of 60 to 65—because they will be denied the allowance and that, too, is grossly unfair.

Others among my colleagues have said that the measure is anti-family. Indeed it is. The married couples allowance was introduced in the first place to compensate for the fact that married couples could not claim the additional single persons allowance. Under these provisions, we are saying, in effect, that it is fine for people to live together because they will be able to claim the additional single persons allowance, but a married couple—who are not both earning—will not be entitled to claim those two personal allowances.

Does the hon. Gentleman accept that, if the Committee accepted the amendment, it would be unfair to two friends or colleagues, one of whom was married and the other not, approaching the age of 65, because the unmarried person would point to the married one and say, "My friend has the allowance and I haven't—what have I done wrong?"? Would that not be grossly unfair?

The hon. Gentleman has conclusively proved that Labour Members have not understood the reason for giving married couples an allowance, which is precisely to benefit people who are married. We all want people being married to be the normal state, because they cost the state less, live more happily and derive all sorts of other benefits from being married. However, it is quite clear that the Government have absolutely no regard for that.

Is not the history of the allowance that it was designed to help married people with the costs of marriage and of children? It would be absurd to reward someone who is 65 simply because that person is married or because he or she opportunistically gets married aged 65 so as to get the allowance.

With that second intervention, the hon. Gentleman gets himself into even deeper water. The married couples allowance is not given only to those who have children. There are thousands of married couples in this country who, for many different reasons, choose not to have or do not have children. Why should they not be given a little help by the tax system?

I am sorry to trouble my hon. Friend again, but I cannot resist the temptation to point out yet another inconsistency between the views of Labour Members. Does he not think it extraordinary that, on the one hand, the hon. Member for Colne Valley (Kali Mountford) says that it is absurd to suppose that people get married to attract the allowance, whereas on the other hand, and only a matter of metres away from her, the hon. Member for Croydon, Central (Mr. Davies) pillories older people, impugns their motives and implies that, at an advanced age, they would rush to the altar simply to get the allowance? Government Members should get the line right.

My hon. Friend is exactly right—no one would rush to the altar to get the married couples allowance. Successive Governments of both colours have decided that it is right to encourage the state of marriage and that there should be an additional allowance to compensate for that.

Will the hon. Gentleman give way?

Will the hon. Gentleman give way?

I give way.

Order. When more than one hon. Member has risen, the hon. Member for Cotswold (Mr. Clifton-Brown) should state to whom he is giving way.

I give way to the hon. Member for Wentworth (Mr. Healey).

Is not the hon. Gentleman overlooking the fact that other parts of the tax system benefit married couples? MIRAS—mortgage interest relief at source—can be claimed by both partners if they are married, but not if they are unmarried—[Interruption.] Transfers between married couples are exempt from capital gains tax, whereas transfers between unmarried couples are not.

I am delighted by that intervention. It is the Labour Government who are abolishing MIRAS, which is another allowance that is transferable between husband and wife. I am all in favour of allowances that are transferable between husband and wife and I strongly supported independent taxation. I urge the hon. Gentleman to make vigorous representations to Treasury Ministers that capital gains tax allowances should remain transferable between husband and wife, because it seems to me that that might well be next on their list for abolition.

The measure is a mean one, and the Government are mean to take a whole year before implementing the replacement allowance in respect of children. It is anti-family, anti-women and ageist. I urge the Government to consider allowing women to claim the allowance when they are 60 and not make them wait until they are 65. Why should women have to work all that extra time to make up their pension so that it provides them with a reasonable living in their retirement?

In so far as the institution of marriage is under threat, few people outside this Chamber and with no political axe to grind would claim that that is due to the Government's decision to abolish the married couples allowance.

Clause 28 deals specifically with couples over the ages of 65 and 75. The hon. Member for Arundel and South Downs (Mr. Flight) said that the allowance could be worth £5,000 a year for couples over the age of 75. I am more concerned about those pensioners over the ages of 65 and 75 who come to my surgeries to thank the Government for providing the minimum pension guarantee, which guarantees approximately £4,000 a year.

I do not know what the hon. Gentleman finds in his surgeries, but 40 per cent. of the population in my constituency are retired and people come to my surgeries and ask, "What is this minimum income guarantee? I thought it applied to all pensioners, but I now find that it applies only to those on income support." Is that not a betrayal on the part of the Government? Pensioners are led to believe one thing, but the reality is quite different.

This Government have introduced the minimum income guarantee for pensioners. In 1983, the previous Conservative Government abolished the link between pensions and earnings, but this Government have restored at least for the minimum guarantee.

My point—which is germane to the discussion of these amendments—is that Opposition Members here are not exercised by a guaranteed income of £5,000. That is a tax relief for those pensioners whose income is so large that they can take advantage of that £5,000 allowance. The question is clear: where do those Members' priorities lie? The priorities of this Budget, as expressed in this clause, are quite clear: we seek to benefit pensioners not through this measure but through other measures set out in the Budget.

Will the hon. Gentleman clarify his remarks? I am sure he will agree that the odd £100 or £200 is worth considerably more to someone on a very low rate of tax than the odd £1,000 or £2,000 is worth to someone who claims the older married couples allowance at the full rate of tax. I cannot square the hon. Gentleman's remarks that the Opposition are interested only in those couples on high incomes. In fact, we are much more interested in the meanness of this change as it affects those on very low incomes.

I am sorry that the hon. Gentleman did not understand me; I shall try to explain my point more fully. It is very simple. We are talking about tax allowances for pensioners whose savings are so substantial that they have steady incomes. They can take advantage of the tax allowances on the income that they generate up to £5,000. But, by abolishing the married couples allowance, the Government have introduced a £1 billion package for poorer pensioners.

The hon. Member for Cotswold (Mr. Clifton-Brown) spent considerable time talking about widows.

The hon. Gentleman misheard me. I was talking about married women who have reached the age of 60, rather than 65, and are officially able to retire and claim the state pension, but who, under these provisions, would be unable to claim the older person's married couples allowance. That seems wrong.

The hon. Gentleman did talk about that, but he also talked about widows. When he was referring to whether women between 60 and 65 can claim the married couples allowance, Labour Members tried to make the point that women cannot claim that allowance because it is men who claim. If the hon. Gentleman had the courtesy to listen to my response to his intervention, he might be enlightened as to that fact, but clearly he is oblivious because he is engaged in conversation on the Back Benches, so he is unable to take advantage of that information.

The hon. Gentleman also said that nobody is about to rush to the altar to get the married couples allowance, and many of my hon. Friends and I entirely agree with him. However, in the very same breath, he said that the Government should give the married couples allowance to encourage marriage. If he accepts that no one gets married on account of the allowance, how can it be deemed to be responsible for more marriages taking place than would otherwise occur, or for maintaining marriages that would otherwise break up? The hon. Gentleman supplied no evidence that the allowance causes or maintains marriages, because there is none whatsoever.

The hon. Member for Arundel and South Downs spoke of the family, and his commitment to that institution is well known in the Committee and elsewhere. What sort of family is he committed to? I grew up in a single parent family because my father died when I was eight. I was later part of a family of siblings because my mother died shortly thereafter. Is the hon. Gentleman saying that families should receive state benefits only if they happen to have the good fortune of having two parents who are still alive to maintain the unit?

If the hon. Gentleman had sat through the weeks of debate in Committee considering the Welfare Reform and Pensions Bill with the hon. Member for Colne Valley (Kali Mountford) and myself, he would have heard what many of us have to say about the position of widows.

With the greatest respect, that does not answer my question. The tenor of the hon. Gentleman's speech was to ask, "Why does marriage matter?" Presumably, we share a consensus that marriage does matter, and the institution of the family matters, because it is the vehicle for raising children. We believe that it is good for two parents to raise children, but we should not penalise families simply because they do not have two parents to raise children. That would be absolutely abhorrent. If we accept that marriage is so important because it is the vehicle for raising children, it is absolutely ridiculous to think that we would take away the allowance on the basis of a partner being widowed.

I am grateful, Sir Alan, for the latitude that you have given me to respond to the points that have been made in the debate.

On a point of order, Sir Alan. The hon. Gentleman has alluded to me on a matter relating to the next debate. Can I, through you, say to the hon. Gentleman that I shall respond to his point in the next debate?

The hon. Gentleman knows that that is not a point of order, but I am sure that the hon. Member for Brent, North (Mr. Gardiner) heard what he said.

The Government seek to ensure, through the changes made in the Budget, that adequate resources go to the poorest pensioners. That policy includes abolishing the married couples allowance for future pensioners, while maintaining it for those who have reached 65 or 75 by the dates specified in the Bill. If that means that Government money is being targeted and better used through the package of £1 billion for pensioners—and particularly, when we consider the married couples allowance, for the children's tax credit—I, for one, wholeheartedly welcome the measures.

Sir Alan, you told the Committee that you would prefer the wider debate on the changes to the married couples allowance and the creation of the children's tax credit to be dealt with in the debate on the next amendment, so I shall respond then to some of the issues that have been raised in this debate.

My hon. Friend the Member for Brent, North (Mr. Gardiner) made an excellent contribution about the importance of supporting families with children and of understanding that, when so many millions of children live in poverty in this country, that must be the Government's priority. We can, if hon. Members wish, return to that subject in more detail in the next debate.

I look forward to hearing, later in the year, the right hon. Member for Hitchin and Harpenden (Mr. Lilley) apologising at a dinner somewhere for his party's opposition to the abolition of the married couples allowance and the creation of the children's tax credit. The remarks made by the Leader of the Opposition in the Daily Mail on 29 January 1998 sum up precisely the Government's intentions, which were supported by the remarks of the hon. Member for Kingston and Surbiton (Mr. Davey). The Leader of the Opposition said

"Previous conservative governments made a mistake in phasing out the married couple's allowance. We wanted to stop well off couples without children getting a tax allowance they did not need. But in doing so we hit families raising children on tight budgets. It is those fami8lies that need our help most."

That is precisely what we propose in the Bill.

The Leader of the Opposition, in his response to the Budget, generously went on to support the Government's proposal to introduce the children's tax credit.

The right hon. Member for Wells (Mr. Heathcoat-Amory), who has apologised to me for the fact that he is unable to be present for my response—he probably mentioned that fact to you as well, Sir Alan—referred to the previous Government's commitment. He made a mistake when he said that they were proud of their record of cutting personal allowances. When pressed by the hon. Member for Kingston and Surbiton, he did not get his answer right, but we look forward to hearing a correction. However, he failed to explain why, in his Budget speech in 1992, the then Chancellor, Norman Lamont—now Lord Lamont—described the married man's allowance, the predecessor of this allowance, as "the male chauvinist allowance", and why the right hon. and learned Member for Rushcliffe (Mr. Clarke) described it as an anomaly in the tax system. That was the previous Government's justification for reducing married couples allowance substantially—leaving us a chaotic system surrounding it—while they presided over a massive growth in child poverty.

The right hon. Member for Wells and several Conservative Members sought to confuse the debate—some of them obviously do not understand the current qualifications for claiming married couples allowance—by making it sound as though the Government are attacking pensioners and have broken their promises. If the right hon. Gentleman takes an unclouded look at the Bill, he will see that clause 28 protects pensioners who are currently receiving the married couples allowance. It is quite right that we should protect those senior members of our community—senior citizens who are already in receipt of the married couples allowance—by maintaining their position.

Will the Paymaster General explain the difference between those people and people who are only a year or two from retirement? What possible changes does she think that people coming up to retirement can make to their retirement provision at that late stage?

First, I remind the hon. Gentleman that the overall Budget package provided £ 1 billion to pensioners through the minimum income guarantee, the £100 heating allowance and by ensuring that we keep the married couples allowance for those who are already retired. Moreover, as the hon. Member for Kingston and Surbiton said—I hope that I am not embarrassing him by drawing too much on his speech—an earlier clause of the Bill provides protection in terms of indexation and allowances.

I know that the hon. Member for Canterbury (Mr. Brazier) feels strongly about the issues surrounding marriage, which we shall discuss when we debate amendment No. 8, but it is cruel for Conservative Members to frighten those who are already retired by making it sound as though something is being taken from them when it is not.

I believe that, when the hon. Gentleman reads the record, he will realise that it is bizarre for the Conservative party to table an amendment that accepts abolition of the married couples allowance for under-65s but provides that the couple may claim it when they reach the age of 65. The hon. Gentleman spoke about signals sent from the Committee. If the amendment were passed, the signals that it would send would create misunderstandings on an unimaginable scale.

Despite the hon. Gentleman's very strong views on marriage—which I respect, although I disagree with them—when the Conservative party was in government, he voted year on year for a policy that reduced the importance of the married couples allowance and the contribution that it made.

I remind the Committee that the married couples allowance has its origins in 1918, when men received an allowance because their wives did not work, in recognition of the extra costs in such cases. Seventy per cent. of married women now work. As my right hon. Friend the Chancellor has pointed out, since then, a chaotic system has developed, in which a two-earner family with children is better off than a one-earner family with children. That cannot be right, even on the basis of what the hon. Member for Canterbury believes.

Will the hon. Lady give way?

I am happy to give way to the hon. Gentleman, because I want to deal with his point about whether men over 65 will now marry younger women in order to claim both allowances. I do not know what his life is like, but I have not come across any constituents who have those bizarre determinations.

The Paymaster General said that we had the bizarre position—of which she implied that she disapproved—where a two-earner couple enjoyed a much better tax position than did a couple with a single earner. If that is the case, why on earth have the Government framed the new child tax credits in such a way as to be extremely harsh on the single-earner couple and generous to the double-earner couple, who can still qualify for those credits although their combined income may be nearly twice that of a single earner couple?

When we debate those clauses, I shall be happy to explain to the hon. Gentleman why his proposition is incorrect. However, if he studies the Bill—especially clause 28—he will find that, in the extremely unlikely event that a man over 65, entitled to claim the married couples allowance, is married to a younger woman with children, who is therefore entitled to receive the children's tax credit, the Bill requires them to choose which one of the allowances they receive.

One point that came up repeatedly needs answering now. Conservative Members argued that there was a entitlement gap—that we took away the married couples allowance and that no one benefited as a result. I remind them again that, from October, the working families tax credit payments will be increased to compensate particularly the low-paid, especially families that are under pressure because their budgets are so low; that the child premium in income support has been increased this year, also specifically targeted on helping those families in most difficulty, with low budgets; and that the child benefit increases—those announced for this April and the additional one for next April—will help families with children, especially families under pressure.

Clause 28 abolishes married couples allowance for couples under 65 but preserves it for couples where the husband or wife has reached the age of 65 before the year 2000-01. That is quite clear in the Bill, and it is just. The hon. Member for Arundel and South Downs (Mr. Flight) misquoted the Chancellor. The Opposition are trying to build up a bandwagon, saying that the Government, or the Chancellor, said things that they did not say. If the hon. Gentleman looks at the record, he will see that the Chancellor rightly said that today's pensioner couples would keep their married couples allowance. That is very clear and I cannot understand why the hon. Gentleman is having difficulty in understanding that sentence or which word is giving him particular problems.

5.30 pm

Abolishing the under-65s allowance for married couples means that we must have a new way of defining the basic married couples allowance so that we can use it for those who are over 65. Clause 28 provides for that minimum level and guarantees that there will be no effect on anyone's tax liability who is now in receipt of the allowance.

It would be a great error if the Opposition insisted on putting into our legislation an amendment that rewarded marriage from the age of 65 onwards but did not address the real stresses and strains in families with children and how families are forced apart because of the poverty that they experience.

When the hon. Member for Buckingham (Mr. Bercow) reads the record of our proceedings, he will realise that the confusion that he was so agitated about, believing that it existed on the Labour Benches, arose from Conservative Members. It was the hon. Member for Arundel and South Downs who suggested that men over 65 would make new arrangements in their life so as to have two allowances. Other Conservative Members suggested that our proposal is a tax on pensioners, when it is not.

I look forward to the next amendments and the next debate, when we can discuss—

Will the Minister answer my question?

in detail the children's tax credit and why the married couples allowance should be abolished. I urge the Committee to reject the amendments.

Will the Minister give way?

The point that the hon. Gentleman wishes to raise is one for the next debate. I shall be happy to deal with it then.

The debate has highlighted one of the worst stealth tax increases in the Finance Bill. The abolition of the married couples allowance will cost about 10 million married couples an extra £197 a year in income tax. When that is combined with the reduction in its value to 10 per cent. in the Government's previous Budget, the cost will be an extra £285 a year in income tax. That is from a Government who covenanted solemnly with the British people that they had no plans to raise taxes, particularly income tax. The measure that we are discussing is a straightforward hike that will affect 10 million couples. Increased income tax bills are being introduced by stealth. This hike will raise £1.6 billion next year and £2 billion the year after that.

The sleight of hand is worse. In his Budget speech, the Chancellor of the Exchequer implied that pensioners would be protected from these measures. [Interruption.] I will quote the right hon. Gentleman. He said:

"Today's pensioner couples will retain the married couple's allowance."—[Official Report, 9 March 1999; Vol. 327, c. 183.]

The hon. Lady the Paymaster General quoted "would" and skipped over the word "Today's", implying that the measure would apply to all pensioners. The key word is today, as the hon. Lady said. Tomorrow's pensioners will not retain the married couples allowance despite having made their financial arrangements on the basis that the allowance would remain. Throughout all the reductions in the value of the married couples allowance under the Conservative Government and under the present Government until now, its value had always been retained for pensioners. That is no longer the position. Its value has not been retained for new pensioners. [Interruption.]

Labour Members should read what Age Concern has said. It states:

"We are already receiving complaints"—

Will the hon. Gentleman give way?

I shall finish this point first. Age Concern states:

"We are already receiving complaints from people who will reach 65 just after that date."

That is 5 April 2000. Age Concern continues:

"From April 2000 there will be the anomalous situation whereby people will miss out on an allowance currently worth some £500, simply because their birthday is just after the specified date."

The hon. Gentleman does himself a disservice when he seeks constantly to mislead the House of Commons and peddles his misrepresentations. My right hon. Friend the Chancellor spoke of "Today's" pensioners, people who are pensioners now, and that is our position. If the hon. Gentleman is so concerned, perhaps he could—

Order. The hon. Lady must not accuse other hon. Members of misleading the House of Commons. She must choose her words very carefully.

I am happy to withdraw my statement about misleading the House of Commons. I am sure that the hon. Gentleman was doing it unintentionally. He just manages to do it in every debate, using the same words. He should now acknowledge that my right hon. Friend the Chancellor said "Today's" pensioners.

That is not what the hon. Lady said.

The record will show that that is what I said. That means what it says and there has been no betrayal, as the hon. Gentleman has suggested.

All that is rich from a party in government that is introducing stealth tax after stealth tax. The impression is given—[Interruption.] The hon. Lady should read her correspondence. Instead of getting her civil servants to write and sign her letters, she should read some of it, including the correspondence that she receives. She should read what Age Concern is saying.

The hon. Gentleman knows full well that I sign my correspondence, and he should withdraw that remark. I sign my ministerial correspondence that goes out in answer to points raised by hon. Members. The hon. Gentleman should withdraw his remark.

I have letters in my file from the hon. Lady which she has not signed. Many Members received letters from her when she was the Financial Secretary which she had not signed. If I am wrong, I shall withdraw my remarks. [Interruption.] I withdraw. I accept her comments but I know very well that there are letters that Members have received, and constituents, that have not been signed by the hon. Lady.

After April next year, married people turning 65 will have to pay an extra £500 a year in income tax. There will be no compensatory children's tax credit for the vast majority. In addition, 300,000 pensioners will lose £75 in dividend tax refunds. Almost 1 million pensioners will find themselves paying higher income tax on their savings income than their marginal rate of income tax. All that the Paymaster General can say in return is that there is a £100 winter fuel allowance. The Government take £500 with one hand and give £100 with the other. The message is clear: do not grow old under this new Labour Government.

My hon. Friend the Member for Cotswold (Mr. Clifton-Brown) was right when he said that a married couple approaching retirement will suffer doubly. First, they will have little chance of qualifying for children's tax credit, although last weekend I found that I had a retired constituent over 65 who had a young child from a second marriage. Secondly, the married couple will have no entitlement to the higher rate of the married couples allowance to which they thought they would be entitled.

Other hon. Members have made some valuable points. They include my hon. Friend the Member for Arundel and South Downs (Mr. Flight), who said that people make careful plans for their retirement. He is right. The Government should not give just one year's notice for the reduction in value of the allowance. It is right also that the elderly population have—

Will the hon. Gentleman give way?

No, I will not give way. There is no time to do so.

My hon. Friend the Member for Arundel and South Downs was also right to say that the elderly population has rumbled the Government. It has done so on the minimum income guarantee and on the dividend tax credit. It is rumbling the Government on the savings tax and it will rumble them on the abolition of the married couples allowance for pensioners.

The Government's decision to abolish the married couples allowance has gone down badly with the public. It is yet another Labour stealth tax, and it is being seen as such. Their decision has also gone down especially badly with those approaching retirement. The Chancellor has no doubt received, as the Paymaster General is also receiving, no doubt, many letters of complaint. I shall quote just one from Mr. J. R. Brett of Bromley, who writes:

"As I shall be 65 on 9th May next year this will mean that for the rest of my life, on today's figures, I shall, in retirement, pay £512.50 more in tax than other pensioners of equal age albeit five weeks older. This is not social justice … It is one thing to juggle with Allowances for those in work, but quite another to penalise pensioners who are unable to make any provision for the loss of such a large part of their income in retirement."

The clause creates social injustice and I urge the Committee to mitigate that injustice by voting for the amendment.