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Spicer, Michael (S Worcs)

Squire, Robin

Stanbrook, Ivor

Stanley, Rt Hon Sir John

Steen, Anthony

Stern, Michael

Stevens, Lewis

Stewart, Allan (Eastwood)

Stewart, Andy (Sherwood)

Stewart, Rt Hon Ian (Herts N)

Stokes, Sir John

Stradling Thomas, Sir John

Sumberg, David

Summerson, Hugo

Tapsell, Sir Peter

Taylor, Ian (Esher)

Taylor, John M (Solihull)

Taylor, Teddy (S'end E)

Tebbit, Rt Hon Norman

Temple-Morris, Peter

Thatcher, Rt Hon Margaret

Thompson, D. (Calder Valley)

Thompson, Patrick (Norwich N)

Thorne, Neil

Thurnham, Peter

Townend, John (Bridlington)

Townsend, Cyril D. (B'heath)

Tracey, Richard

Tredinnick, David

Trippier, David

Trotter, Neville

Twinn, Dr Ian

Vaughan, Sir Gerard

Viggers, Peter

Waddington, Rt Hon David

Wakeham, Rt Hon John

Walden, George

Walker, Bill (T'side North)

Waller, Gary

Ward, John

Wardle, Charles (Bexhill)

Warren, Kenneth

Watts, John

Wells, Bowen

Wheeler, Sir John

Whitney, Ray

Widdecombe, Ann

Wiggin, Jerry

Wilkinson, John

Winterton, Mrs Ann

Winterton, Nicholas

Wolfson, Mark

Wood, Timothy

Woodcock, Dr. Mike

Yeo, Tim

Young, Sir George (Acton)

Tellers for the Noes :

Mr. Alastair Goodlad and

Mr. Tony Durant.

Question accordingly negatived.

Clause added to the Bill.

New Clause 1

Community charge benefit

In section 22A of the 1986 Act,

(a) at the beginning of subsection (1) there shall be inserted the words "Subject to the provisions of subsection (1A) below," ; (b) after subsection (1) there shall be inserted the following subsection--

"(1A) For the purpose of determining such entitlement or such amount in any such case, the amounts of capital prescribed under section 22(6) and (7) above shall be doubled.".'.-- [Mr. Meacher.] Brought up, and read the First time.

Mr. Meacher : I beg to move, That the clause be read a Second time.

Mr. Speaker : With this it will be convenient to take the following amendments : (b), at the beginning insert--

(1) In section 22 of the 1986 Act, after subsection (6) there shall be inserted the following subsection--

"(6A) Regulations shall make provision for entitling any person to housing benefit in the form of a community charge rebate for any period in respect of which he would have been so entitled if the amount prescribed under subsection (6) above during that period had been £16,000.

(2)'.

(a), in new subsection (1A), leave out 22(6) and (7)' and insert 22(7)'.

Mr. Meacher : It speaks for itself that, since 3.30 pm, we have had seven and a half hours under a Government guillotine, yet only now do we reach the first Opposition new clause. The full absurdity of the Government's guillotine is shown by the fact that we have been allocated the next 47 minutes to debate seven Opposition new clauses and amendments.

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The first concerns the poll tax, and I have little doubt that it will take the full time until 12 o'clock--indeed, the debate could have gone considerably beyond that time. Everyone realises that the Chancellor's proposed concession in the Budget to alleviate poll tax bills has turned out rather less of a sweetener and more of a confidence trick, for two main reasons. The first is that the proposed formula will mean that most pensioners and others will get little or nothing extra in relief. The other is that the Chancellor simply forgot about Scotland and its right to equivalent relief over the past year. The first objection is fully redressed by new clause 1 and I invite support for it from hon. Members on both sides of the House who agree with the statement yesterday by the right hon. Member for Shropshire, North (Mr. Biffen) :

"It"--

referring to the poll tax--

"needs to be reconsidered in respect of the abatements made and the effectiveness of the transitional arrangements".--[ Official Report, 27 March 1990 ; Vol. 170, c. 243.]

On the first point, I submit that we propose precisely the kind of reconsideration for which the right hon. Gentleman asked.

11.15 pm

Under the Government's proposal, most people will find when they come to claim that they will get little or nothing extra. The reason is the rule on tariff income : for every £250 in savings over £3,000, they are deemed, however unrealistically, to receive an income of £1 a week, and that reduces their poll tax rebate by 15p a week. Let me give an example of a pensioner who has just less than £16,000 in savings-- presumably, the type of person that this "concession" was designed to assist. The net effect of all the deductions is that his or her poll tax rebate is reduced by £7.65 a week. I am sure that hon. Members will not closely follow these figures, but I assure them that they have been carefully checked and I am certain that they are correct. As benefit is calculated on a maximum 80 per cent. of the poll tax, this equates with a poll tax bill of £497 a year. In other words, that pensioner, who is clearly intended to be a main beneficiary of the great poll tax concession, will not get a penny unless he or she lives in one of four local authority areas in England and Wales--those with a poll tax above £497 a year. So much for the Budget special offer!

Hon. Members will agree that many pensioners will be bitterly disappointed when they realise that the increase in the capital cut-off allows them merely to fill in a form and then have a zero rebate calculated. It is disgraceful for the Government to raise hopes as they did in the Budget and then dash them when people discover that they will get only tiny amounts of aid to offset their massive poll tax bills.

The Government's error has been in raising the upper capital limit but not the lower limit. If the lower threshold at which deductions start had been doubled to £6,000--which is what one might expect--the value of the concession would have been greatly increased. That is precisely why my right hon. and hon. Friends and I have tabled the new clause. It effects exactly that purpose.

Only a few days ago, in Committee, the Minister declared that a limit of £16,000 for couples was on the high side. I am glad that, after a presumably deafening outcry from the Tory heartlands, he has decided to recant. For the Government to raise the upper limit but not the lower one can only reflect one of two things--either it shows

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incompetence in that they intended pensioners to get a much bigger gain from this concession, but they bungled the operation, or it shows cynicism, in that they knew well that most of the concession would be diminished or even extinguished in practice, but they wanted the political credit of at least the appearance of making a generous offer.

I leave it to the Minister to say which of the two motivations applied. I do not know, but whichever it was, it is now in the interest of equity and reasonableness to change the formula, and on those grounds I seek support for the new clause.

Mr. Christopher Hawkins (High Peak) : The hon. Gentleman is aware that I, too, am keen to sort out the anomalies on this issue. I am not sure why he wants to raise the amount of capital that is disregarded, because that would create further anomalies by making people with those amounts of capital have their benefit assessed on the basis of too low an income for them.

At present, the problem is that people with high amounts of capital up to £16,000 have a notional income for DSS purposes which is way above their actual income because of attributing 20.8 per cent. interest to every extra £1,000 of savings above £3,000. That is the £1 per week per £250--being £52 a year per £250--which is £208 a year per £1,000, and that is 20.8 per cent. interest on every extra £1, 000. The problem is-- [Hon. Members :-- "Too long."] I hope I may be allowed to complete this, and I promise not to intervene later. The problem is that if one raises the lower limit, one is creating as big an anomaly at the bottom by assessing those people's benefit on an income which is lower than their real income. It would be better if the DSS scrapped the 20.8 per cent. interest on extra savings and stuck in annually, at uplift time, the actual interest available based on the best practice in the high street and by building societies, currently about 11 per cent. Putting it simply, if instead of the level being £1 per week per £250 it was 50p per week per £250, that would be available in every high street in Britain.

Mr. Meacher : The hon. Gentleman makes an extremely valid point. I have always thought that the tariff rate of income which suggests that one has a 20 per cent. yield on one's investments must mean that one is getting some extremely good stockbroker advice, and I doubt whether such advice is available to those on income support. The rate of 20 per cent. is absurd. I would not care to say what the rate should be, but I would have thought that it should be something less than half that rate, and then there would be the offsetting effect, and the damage in extinguishing the right to benefit would be that much less.

That is a separate point and, while I do not dispute the validity of the hon. Gentleman's argument, I hope he will agree that until the DSS makes that change, it is important to raise the lower threshold. We cannot tonight change the tariff rate of income, but the way to ameliorate the effect would be to raise the lower threshold. Because of the shortness of time, I will not dwell on amendment (b) in the name of my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar). I understand, from what was said at Scottish Question Time today, that there is shortly to be a full statement on the matter from the Secretary of State for Scotland. My hon. Friends and I will be looking at that statement on three clear and

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explicit criteria : the adequacy or otherwise of the extra funds that are made available ; the ex gratia nature of the scheme ; and how it will be ensured that those entitled receive payments retrospectively on a strictly comparable basis to those now made available in England and Wales.

The view that rebates to alleviate the full horrific force of the poll tax should be maximised is shared on both sides of the House. We do not know whether the formula enunciated by the Chancellor in his Budget was by accident or design, but we know that raising the upper capital limit and not the lower one has the counter-productive effect of extinguishing a large proportion of the relief that presumably was intended. On that basis, I hope that new clause 1, which corrects that error, will command approval in all parts of the House.

Mr. Hawkins : I said a moment ago that I would not speak again, because I was conscious of the guillotine, but I had not realised that no one else wanted to speak.

I greatly welcome the fact that the Chancellor responded to representations by raising the capital limit to almost £16,000. It is now important to get the DSS rule on the interest implied in the capital changed. Sympathetic as I am to what the hon. Member for Oldham, West (Mr. Meacher) is trying to achieve, I do not want to support the creation of another anomaly at the bottom end by assuming no interest on the first £3,000 or £6,000. That would be to underrate the income that those people with savings genuinely have. What I should like to see is a system that is neutral as between saving and not saving. The way to make the system neutral is to impute to savings the best-practice interest rate that a normal human being anywhere in Britain can earn on the high street.

By doing that, one would, for benefit purposes, be using a person's actual income from savings, added to his actual income from other sources, and comparing the resulting figure with the benefit tables to see whether he qualified for a rebate. I have drawn to the attention of Ministers the situation of a person with savings who, before the Budget, may have had an income one third lower than that of someone who did not save. A couple could have an income of just £100 a week, made up of retirement pension and interest on savings, and fail to qualify for a rebate. Yet a couple in my area, where the poll tax is £400, could have an income of £150 a week and qualify for the rebate, so long as their income was not derived from savings. A couple with savings living on £100 a week fail to qualify, yet a couple who have not saved but whose income is 50 per cent. higher do qualify. That is a ridiculous anomaly. It is a massive penalty on savings--much too great to put right.

While I support the Opposition's intentions, I have to point out that raising the lower limit would create anomalies similar to those that would arise from playing with the upper limit without changing the interest rate. I should like the Minister to consider a move to a neutral system--a system that would not impose a penalty on savers. Of course, I do not expect a considered response tonight. The way to achieve what I have in mind is to impute to capital the interest rate that can actually be achieved on the high street. Magically, at the moment, there is the lovely convenience in that, instead of being £1 a week per £250 of savings, which is the current rule, it

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should be 50p a week per £250 of savings. There is an over-estimate of precisely 100 per cent. What I am suggesting would put the whole matter to rights.

Mr. Peter L. Pike (Burnley) : I shall be very brief. It was strange that the Minister should indicate from a sedentary position his intention to speak at the end of the debate. Many hon. Members, including myself, would have liked to hear an immediate response to the case made by my hon. Friend the Member for Oldham, West (Mr. Meacher) in his opening speech. This is an important debate, and I am surprised at the course that the Minister is adopting.

The case that the hon. Member for High Peak (Mr. Hawkins) has made has considerable merit, and is worthy of consideration. Of course, it is not relevant to this new clause. Many constituents have written to ask me where they might get the rate of interest that is used as the notional figure when the DSS is calculating benefit. The hon. Member's case should be pursued and hopefully it will be supported by hon. Members on both sides of the House.

Having listened to the Chancellor's Budget statement last week, I think it would have benefited more people if he had increased the £3, 000 limit to £6,000 rather than doubled the £8,000 to £16,000. There is considerable merit in the new clause. I hope that the Minister will respond positively and say that the Government are prepared to accept the new clause.

11.30 pm

Mr. David Nicholson (Taunton) : I listened carefully to the points made by my hon. Friend the Member for High Peak (Mr. Hawkins) and by the hon. Member for Burnley (Mr. Pike). On examining the matter, I think that we should proceed on the basis of real figures in the market place.

Shortly after the Chancellor's excellent concession in the Budget of the increase in the savings limit, I tabled a question to my right hon. Friend the Secretary of State for Social Security, asking what action he was taking to vary the tapers in calculating housing benefit and community charge concessions. The reply was that no change would be made in the tapers. That may be all right in regard to the community charge because the tapers are extremely low and one loses benefit slowly in relation to increases in income. But I believe that the tapers for housing benefit are much more fierce. Obviously the Government cannot deal with the matter in the debate, but in due course we should be given exemplification of the rebates that might be available in relation to various levels of income and capital so that we can pass the information to our constituents. I pay tribute to the Under-Secretary for the written answer last autumn, which set out the income levels on which rebates were available. I found the information extremely useful when replying to queries from constituents. All hon. Members want to help their constituents as much as possible to maximise the rebates that they may get in relation to the community charge, housing benefit and other benefits.

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