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Mr. Norman Lamont : There have been a number of strong and notable speeches. The Government appreciate the importance of workplace nurseries and of encouraging married women to return to work. My hon. Friends the Members for Maidstone (Miss Widdecombe) and for

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Wyre (Mr. Mans) pointed out that this country has been conspicuously successful in encouraging married women to return to work.

Mr. Tony Marlow (Northampton, North) : Why on earth should we encourage married women to return to work? That is pure Socialism. Why should we not encourage them to stay at home and look after their children? We have great problems with hooligans and vandalism because of ill- disciplined children. Why should we not give a financial incentive to mothers to stay at home and look after their children rather than encouraging the Socialist bunkum and junk put forward by the other side?

9.45 pm

Mr. Lamont : My hon. Friend is being a little hasty if he thinks that I am about to accept the new clause. In fact, I am about to reject it. I was not suggesting that there should be a financial incentive. The burden of my argument will be that if married women want to work and if employers want to employ them, the market will work and employers will pay the necessary wage to encourage married women to return to work.

The new clauses epitomise one of the dilemmas. A narrower and more focused new clause was moved by the hon. Member for Islington, South and Finsbury (Mr. Smith). His new clause would confine tax relief to workplace nurseries. The new clause tabled by the hon. Member for Berwick-upon-Tweed (Mr. Beith) provides for tax relief not just for workplace nurseries but for those who seek to make their own provision for the care of their children at home. I have to reject his new clause on the grounds of cost and of its very large deadweight element.

The effect of the new clause would be to give a large tax subsidy to people who already employ nannies, thereby making provision for the care of their children at home. However, the hon. Member for Berwick-upon-Tweed has a point. If tax relief is confined narrowly to workplace nurseries, it would result in many inequalities which would not be fair. It would lead to unfairness as between one taxpayer and another.

The hon. Gentleman has not met all the problems that his new clause would create. It would lead to tax relief being given to families where both parents go out to work and pay someone else to look after their children. No tax relief, however, would be given to families where one or other of the parents chooses not to go out to work but to stay at home and look after the children. If the husband goes out to work, however, the wife may prefer not to spend her time looking after the children. She may prefer to play golf and to employ somebody else to look after the children. Under new clause 11, that family could receive a child care allowance. Is that what the hon. Member for Berwick-upon-Tweed really has in mind? It might be possible for the taxpayer to pay a relative--perhaps a grandparent--to look after the children and to claim tax relief. What about neighbours looking after each other's children, paying each other for doing so and getting tax relief at the same time?

The new clause is at least to be commended for attempting to face the basic issue of equity as between one taxpayer and another, but the more one looks at the new clause the more one realises that it would lead to further difficulties and problems. Its deadweight cost would amount to about £100 million, before one began to consider whether it would have any effect on behaviour, or

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whether it would encourage people to return to work or make provision for their children in the way that the hon. Gentleman suggests.

Mr. Hawkins : Is there not a fundamental drawback to workplace nurseries? I find it odd that the Labour party is supporting the idea so strongly because when the mother changes her job the child has to leave the nursery. Surely we should encourage nursery provision regardless of people's jobs or workplace.

Mr. Lamont : That may well be so.

The hon. Member for Islington, South and Finsbury referred to the tax relief in the tax system. It is important to realise that the tax system, in certain ways which correspond to the basic tax rules, allows employers certain deductions for the provision of workplace nurseries. Employers can set against profits for corporation tax purposes a wide range of expenditure on their day-to-day running costs, because those costs are regarded as normal business costs for providing facilities and suitable working conditions for employees. They can also get tax allowances for capital expenditure on equipping a workplace nursery. Some employers, such as those in the industrial sector, may also get capital allowances for expenditure on constructing or acquiring a building for a workplace nursery. Employers can thus claim a number of reliefs in making workplace nurseries available.

Because the benefits in kind regulations apply only above an £8,500 threshold, many married women earning less than £8,500 per year are not taxed on the benefit of the workplace nursery. The specific regulations correspond with general reliefs in the tax system and are compatible with our existing system, but they give some encouragement to workplace nurseries. However, our tax system does not--and did not even under a Labour Government--give tax relief to enable people to carry out a particular job. There is no such thing as tax relief to enable someone to do a job. Expenses in the performance of a job may be tax deductible, but expenses to put someone in a position to carry out a job are not tax deductible. Hon. Members on both sides of the House will know that over the years there has been enormous pressure to make travel-to-work expenses tax deductible. The hon. Member for Bridgend (Mr. Griffiths) gave that away when he talked about people going to work in buses provided by employers. That is taxable, and so it should be because it is a very considerable benefit in kind. Governments of both parties have always taken the view that we should not provide tax relief for expenses that enable people to carry out their jobs.

The hon. Member for Islington, South and Finsbury is under a number of misapprehensions. First, there is no special "nursery tax". The benefit of an employer-subsidised nursery place is subject to income tax in exactly the same way as other benefits in kind provided by an employer. Secondly, it is not a new tax. Such benefits have been within the charging rules since they were first introduced by the Labour party more than 40 years ago. Thirdly, the charge is not in any sense disproportionate because a place at a subsidised workplace nursery can be a very considerable benefit. It can certainly run into hundreds of pounds, and over a year it may be worth more that £1,000 to an employee.

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In principle, an employee's tax bill should not be based on the extent to which he is paid in cash or in kind. All employees should be taxed on the same basis. If an employee pays tax on the benefit of child care provided by an employer, that treatment is entirely consistent and fair to the vast majority of employees who have to pay for child care out of taxed income. I do not believe that new clause 9 would be universally welcomed. It would not be welcomed by the many working parents who arrange their own child care and pay for it out of taxed income.

Secondly, the new clause provides only for employees. There would be nothing for the self-employed. There is nothing for employees whose employers provide other forms of assistance with child care, such as making contributions to places in community nurseries or for child-minding. It would provide nothing for families who prefer to leave their children with a relative or child-minder and nothing for families who arrange their affairs so that children can be cared for at home.

The inequities in the Labour party's approach are self-evident. Labour Members are also arguing that we should give tax relief to enable people to be in a position to carry out their job. The tax system has never done that before. We have not done that with expenses for travel to work in the past. There is no reason to believe that the present tax treatment of child care expenses is a barrier to the employment of women with children.

There has been a large increase in the number of women who work and the evidence is that the number of workplace nurseries is growing all the time. Employers are providing such nurseries because they want to recruit labour. We hear about the demographic changes. If employers want to employ married women, they will pay the rate the market demands and ensure that married women are in a position to return to work and are provided with the facilities to enable them to do so. New clause 9 is riddled with anomalies and would be a major inconsistency in the tax system.

Mr. Chris Smith : Our debate on the important new clause has been marked by strong speeches from many of my hon. Friends. It has also been marked by two quite remarkable contributions from the hon. Members for Buckingham (Mr. Walden) and for Ealing, North (Mr. Greenway). Both of them argued for universal nursery education and said that we should propose good nursery education provision for all children. Of course the Labour party agrees with that. We have been arguing that for many a long year and--

Mr. Walden : Will the hon. Gentleman give way?

Mr. Smith : No, because time is short.

Hon. Members : Give way.

Mr. Speaker : Order.

Mr. Smith : Conservative Members support a Government who have done everything in their power to make it difficult for local authorities to provide good nursery education and nursery provision for the under-fives. I am pleased and proud to say that all the 24 top local authorities in terms of the provision of nursery education are Labour controlled. They are the authorities which provide good quality nursery education.

We should be looking, of course, for universal provision. It would be a range of provision provided by

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local authorities, voluntary agencies and employers as well. Simply to say that Labour is interested only in workplace nurseries provided by employers is wholly to misinterpret and misunderstand what we are arguing. We are arguing clearly for the removal of the tax on workplace nurseries as part of the overall solution to the problem of inadequate childcare. It is not the whole answer, but it is part of the answer and it would be a step along the road to improvement. The Financial Secretary put two arguments. First, he said that there was no such thing as a relief for expenses to put oneself into a position to do a job. If that is so, I must ask him why on earth clauses 50, 51 and 52 are included in the Bill. They provide precisely such a relief for expenses to put oneself into a position to do a job. We are asking only for the same treatment for mothers who have to take up a workplace nursery place to enable them to do a job.

Secondly, the Financial Secretary said that workplace nursery provision was treated in exactly the same way as other benefits. When it is treated in the same way as subsidised canteens, sports grounds and business lunches, we shall agree with him, but such benefits are not subject to the tax to which workplace nursery provision is subject.

We are arguing for the simple removal of a tax which acts as a disincentive to women playing their full part in our economy. Not only does it discourage women from playing a part by going to work ; it deprives children by preventing them from gaining the full experience from which they might otherwise benefit.

The real face of the Conservative party was revealed by the hon. Member for Macclesfield (Mr. Winterton), who said that there should be a financial incentive for mothers to stay at home. We strongly disagree. We want to ensure that more women can join the work force and play a full part in our national life if they want to, and the new clause represents a small step towards achieving that goal. Question put, That the clause be read a Second time :

The House divided : Ayes 200, Noes 273.

Division No. 293] [10 pm


Abbott, Ms Diane

Adams, Allen (Paisley N)

Alton, David

Anderson, Donald

Archer, Rt Hon Peter

Armstrong, Hilary

Ashton, Joe

Banks, Tony (Newham NW)

Barnes, Harry (Derbyshire NE)

Barnes, Mrs Rosie (Greenwich)

Barron, Kevin

Battle, John

Beckett, Margaret

Beith, A. J.

Benn, Rt Hon Tony

Bennett, A. F. (D'nt'n & R'dish)

Bermingham, Gerald

Bidwell, Sydney

Blair, Tony

Blunkett, David

Boateng, Paul

Boyes, Roland

Bray, Dr Jeremy

Brown, Gordon (D'mline E)

Brown, Nicholas (Newcastle E)

Buckley, George J.

Caborn, Richard

Callaghan, Jim

Campbell, Menzies (Fife NE)

Campbell, Ron (Blyth Valley)

Campbell-Savours, D. N.

Canavan, Dennis

Carlile, Alex (Mont'g)

Clark, Dr David (S Shields)

Clarke, Tom (Monklands W)

Clay, Bob

Clelland, David

Clwyd, Mrs Ann

Cohen, Harry

Coleman, Donald

Cook, Robin (Livingston)

Cousins, Jim

Cox, Tom

Cryer, Bob

Cummings, John

Cunliffe, Lawrence

Cunningham, Dr John

Dalyell, Tam

Darling, Alistair

Davies, Rt Hon Denzil (Llanelli)

Davies, Ron (Caerphilly)

Davis, Terry (B'ham Hodge H'l)

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Dewar, Donald

Dixon, Don

Dobson, Frank

Doran, Frank

Dunnachie, Jimmy

Dunwoody, Hon Mrs Gwyneth

Eadie, Alexander

Eastham, Ken

Ewing, Harry (Falkirk E)

Ewing, Mrs Margaret (Moray)

Fatchett, Derek

Fearn, Ronald

Field, Frank (Birkenhead)

Flannery, Martin

Flynn, Paul

Foot, Rt Hon Michael

Foster, Derek

Foulkes, George

Fraser, John

Fyfe, Maria

Galbraith, Sam

Garrett, John (Norwich South)

Gilbert, Rt Hon Dr John

Godman, Dr Norman A.

Golding, Mrs Llin

Gould, Bryan

Graham, Thomas

Griffiths, Nigel (Edinburgh S)

Griffiths, Win (Bridgend)

Grocott, Bruce

Hardy, Peter

Haynes, Frank

Henderson, Doug

Hinchliffe, David

Hoey, Ms Kate (Vauxhall)

Home Robertson, John

Hood, Jimmy

Howarth, George (Knowsley N)

Howell, Rt Hon D. (S'heath)

Howells, Geraint

Hoyle, Doug

Hughes, John (Coventry NE)

Hughes, Robert (Aberdeen N)

Hughes, Roy (Newport E)

Illsley, Eric

Ingram, Adam

Janner, Greville

Jones, Barry (Alyn & Deeside)

Jones, Ieuan (Ynys Mo n)

Jones, Martyn (Clwyd S W)

Kaufman, Rt Hon Gerald

Kennedy, Charles

Kinnock, Rt Hon Neil

Kirkwood, Archy

Lambie, David

Lamond, James

Leadbitter, Ted

Lestor, Joan (Eccles)

Lewis, Terry

Litherland, Robert

Livsey, Richard

Lloyd, Tony (Stretford)

Lofthouse, Geoffrey

McAllion, John

McAvoy, Thomas

McCartney, Ian

Macdonald, Calum A.

McFall, John

McKelvey, William

McLeish, Henry

McNamara, Kevin

Madden, Max

Mahon, Mrs Alice

Marshall, David (Shettleston)

Marshall, Jim (Leicester S)

Martin, Michael J. (Springburn)

Martlew, Eric

Maxton, John

Meacher, Michael

Meale, Alan

Michael, Alun

Michie, Bill (Sheffield Heeley)

Michie, Mrs Ray (Arg'l & Bute)

Mitchell, Austin (G't Grimsby)

Moonie, Dr Lewis

Morgan, Rhodri

Morley, Elliott

Morris, Rt Hon A. (W'shawe)

Morris, Rt Hon J. (Aberavon)

Mowlam, Marjorie

Mullin, Chris

Murphy, Paul

Oakes, Rt Hon Gordon

O'Brien, William

O'Neill, Martin

Orme, Rt Hon Stanley

Parry, Robert

Patchett, Terry

Pendry, Tom

Pike, Peter L.

Powell, Ray (Ogmore)

Prescott, John

Primarolo, Dawn

Quin, Ms Joyce

Radice, Giles

Randall, Stuart

Redmond, Martin

Rees, Rt Hon Merlyn

Reid, Dr John

Richardson, Jo

Roberts, Allan (Bootle)

Robertson, George

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