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Mr. Timothy Raison (Aylesbury) : I hope my right hon. Friend the Minister will pay serious attention to the point made by my hon. Friend the Member for High Peak (Mr. Hawkins). It would be a strange irony if, after a Budget

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which not only contained the concession of increasing the permitted amount of capital but which introduced specific savings schemes, we should persist with the notion that for every £250 of capital a person has he should lose £1 a week. We have seen the strengthening of the PEP scheme and the proposed introduction of the TESSA scheme. Those schemes are directed entirely towards the type of people whom we are talking about. We are trying to encourage those people to save. It is a cruel irony if people who have saved over the years find themselves taxed at a penal rate on their capital. I hope that my right hon. Friend will think seriously about the point.

Mr. Jim Sillars (Glasgow, Govan) : Those of us from Scotland are labouring under a great difficulty because we have not had any statement from the Secretary of State for Scotland on how he intends to disburse the £4 million ex gratia payment that was announced last week. It was not announced in the House. As I understand it, it was announced at a hastily called press conference. We are not sure whether it was a Lobby meeting or a formal press conference. In Scotland there has been a great deal of consternation ever since about the method of handling that announcement. But here we are tonight and the Secretary of State for Scotland is "semi- detached" from the rest of us. He is not sitting on the Front Bench, where he could respond to invitations to intervene and to put the record straight. He is developing a rather shy attitude.

The chairman of the Tory party in Scotland, the Under-Secretary of State, the hon. Member for Stirling (Mr. Forsyth), paid a fleeting visit to the Chamber and then beat it as fast as he could. That is not characteristic of him. He is normally up front, arguing vociferously for Government policy. I am now told that he is up the back somewhere, rather than on the Front Bench where he should be. Our other difficulty is that we do not really know what the Government's attitude is, because each time they touch the poll tax some sort of change or a semi-U turn takes place. They would be well-advised to take on board the message contained in new clause 1, moved by the hon. Member for Oldham, West (Mr. Meacher). The Government are only just beginning to understand many of the problems that are developing with the poll tax south of the border that people north of the border have understood for a considerable time. When the Chancellor made his statement about poll tax rebates in the Budget I thought that it was a very strange thing to do. That statement on the upper limit of savings for rebates had absolutely nothing to do with the Budget. It was not a Finance Bill measure, and it is interesting that the legislation will come as secondary legislation from the Department of Social Security. Therefore, one can only assume that he included the measure in the Budget speech to gain political benefit at a time that looked pretty bad for the Conservative party. The great problem, if one engages in a con trick without thinking it through, is that one has to live with the consequences. I shall tell the Minister for Social Security of some of the consequences. An old lady constituent of mine visited me at my office in Ibrox in Glasgow. She does not have any money in the bank, but with her pension and the pension that she obtains from her husband's work she is above the limit for any rebate on the poll tax and therefore pays the full amount. After a discussion with her family and her

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neighbours she came to me and said, "If they are going to give folk with £16,000 in the bank a rebate on the poll tax, then why don't I get a rebate, as I've got no money in the bank?" The logic was that she thought she must get a rebate. She was going to pay another instalment of the poll tax, but did not do so until she had had a chat with me because she was convinced that justice had to be done. She said, "I do not have £16,000. Why should I be paying the full tax? Surely I'm entitled to a rebate." She was astonished, scandalised and angry when I explained to her that it did not matter whether she had money in the bank ; her income carried her above the line and there would be no rebate.

Then I met someone else who assumed that because he has more than £8,000 in the bank--but not as much as £16,000--he was automatically guaranteed the full rebate. When I explained the situation, there was even greater anger. Such folk read the Chancellor as they were meant to read him on that particular day. They understood that a massive concession was coming from the Government and that they should be applauding their television screens. Then the cold light of reality struck some days later and they found that there was not a penny piece of help in it for them.

I am addressing my remarks to Conservative Back Benchers and not to the Government because, from the experience of recent weeks, it seems that the Government will respond only to pressure from them. Conservative Members might think that their crisis on the poll tax is over. I noticed in one Scottish newspaper that the Secretary of State for Scotland is alleged to have told his Cabinet colleagues that the main pressure will be put on them when people learn the level of the poll tax, and that once the bills start dropping through the letter box the anger will start dropping off. That is not true. If he told his Cabinet colleagues that, he has misled them once again. Our experience in Scotland is that it is when the bills rattle through the letter box and people are forced to decide whether to pay and how much to pay that the anger starts.

The major problems for the Conservative party in England are yet to come. The sensible thing would be for Conservative Members to take a small step backwards, to listen carefully to what has been said on new clause 1 and to accept it as the first step towards a major reconstruction of local government finance in England and Scotland. No matter how much we tinker with the poll tax, it remains fundamentally flawed because it does not take account of people's ability to pay. I am sorry that the Prime Minister is not here. The message which was sent from Mid-Staffordshire, and which will be sent from Glasgow on Saturday--

Ms. Short : The alternative is Labour.

Mr. Sillars : If the hon. Lady is telling me that the roof tax is a sensible alternative to the poll tax, she and I will have to differ.

Ms. Short : Surely the lesson of Mid-Staffordshire is that the only alternative to the present Government is a Labour Government.

Mr. Sillars : Believe it or not, if we cannot win independence at the next election, I look forward to the day when we shall have a Labour Government instead of

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a Tory Government in this place because I shall then have the pleasure of watching the Labour party trying to reconcile the contradictions in its policy--

Mr. Jimmy Hood (Clydesdale) : The hon. Gentleman will not be here to watch it.

Mr. Sillars : Whether I am here or watching it on television is immaterial. I recall a period when we had a Labour Government who were cutting the National Health Service, housing and education. How do Labour Members reconcile the policy of the shadow Chancellor of the Exchequer, who goes around the City of London telling all those in the boardrooms that fundamentally nothing will change under a Labour Government, with Back- Bench Labour Members simultaneously telling people in housing, education and the Health Service that they will be able to allocate the additional resources? I reckon that 12 to 18 months of a Labour Government in power here will advance the cause of Scottish independence by a fair number of years. I return to the message of Mid-Staffordshire. Of course, I accept that the hon. Member for Birmingham, Ladywood (Ms. Short) interprets it as she has. But I think that there is another important message for the Prime Minister from Mid-Staffordshire and from the great demonstration of non- payers of the poll tax in Glasgow this Saturday. It is quite simple : if the poll tax does not go, she will have to.

Mr. Scott : Perhaps I should explain that it seemed unnecessary for me to intervene twice in the debate. I felt that it was better to listen to the bulk of the arguments and then to respond, perhaps leaving the Opposition Front-Bench spokesmen the last word in the debate. That seemed to be the most effective way in which to deal with the matter.

I think that we can all agree on one thing--we welcome the announcement by my right hon. Friend the Chancellor of the Exchequer in his Budget statement that he intended to raise the upper capital limit for income support and family credit from £6,000 to £8,000 and the upper limits for community charge and housing benefit from £8,000 to £16,000 from April. It is worth reminding the House that the change means that 250,000 people will be helped at a cost, in all benefits, of £120 million. That cannot be regarded by anyone who takes a fair view of matters as anything other than a significant change.

In essence, the change was introduced to ensure that many people who save conscientiously throughout their lives should not be prevented from claiming help with community charge or with their rents, particularly in retirement. In fact, about two thirds of those who will be helped by this very welcome change announced by my right hon. Friend the Chancellor will be pensioners.

It was suggested that people having capital in excess of £10,000 will not benefit from those changes, but nothing could be further from the truth. We estimate that 70,000 extra benefit cases, affecting 100,000 individuals, will involve capital in excess of £10, 000 and that the vast majority of them will concern pensioners. There are still gainers even among those having capital of between £14,000 and £16,000. We estimate that 15,000 people in that bracket, again mainly pensioners, will also gain. That should be the starting point for our consideration of new clause 1.

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11.45 pm

The Opposition's new clause, which doubles upper and lower limits for couples only, should be rejected. We extended the upper capital limit for all claimants, and right hon. and hon. Members should be aware that the Opposition's new clause contains a serious anomaly. I take the example of a couple having capital greater than £8,000 and being entitled to community charge benefit. Under the Opposition's proposals, if one of them were to die, the surviving partner would not be entitled to benefit because the upper capital limit of £8,000 would be relevant when her benefit was reassessed. It follows that new clause 1 might deprive people of community charge benefit at a very vulnerable moment in their lives.

The Opposition make general points, but they should think through the practical effects of their proposals. In this case, a serious anomaly would result, with widows, for example, losing entitlement to community charge benefit in the circumstances I described.

Mr. Wilson : Will the Minister give way?

Mr. Scott : No, because I want to allow time for the hon. Member for Oldham, West (Mr. Meacher) to respond.

My hon. Friend the Member for High Peak (Mr. Hawkins) suggested that imputed interest should be taken into account rather than tariff income. That proposal would cause problems, and it would be difficult to administer. However, I am happy to discuss the implications of my hon. Friend's proposal with him to see whether those practical difficulties can be tackled. Obviously we want to monitor the results of different

Mr. Anthony Beaumont-Dark (Birmingham, Selly Oak) : Will my hon. Friend allow me to intervene?

Mr. Scott : No, because I must--

Mr. Beaumont-Dark : Then we shall vote against the Government.

Mr. Scott : I understand that, but the debate must end in 12 minutes. I said that I am perfectly prepared to discuss with my hon. Friend the Member for High Peak his proposals, but I assure him that they would present serious practical difficulties. If we can overcome them, I shall take his suggestions into account when we reconsider these matters in due course.

The hon. Member for Oldham, West suggested that pensioners having capital of £16,000 will not benefit unless the community charge is greater than £9.75 per week.

Mr. Meacher indicated dissent.

Mr. Scott : The effect of tariff income depends on other income of which the claimant is in receipt.

Mr. Meacher : The Minister could not have been listening. I did not cite a figure of £9.75 but one of £7.65.

Mr. Scott : I am sorry if I misheard the hon. Gentleman. The fact remains that a pensioner aged over 75 with capital of £16,000 or other income of less than about £20 per week will still receive the maximum rebate. I repeat that about 15,000 pensioners having capital of between £14,000 and £16,000 will still gain from the announcement made by my right hon. Friend the Chancellor of the Exchequer. My hon. Friend the Member for Taunton (Mr. Nicholson) asked for examples of benefit entitlement. I am

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only too willing to provide that information. If my hon. Friend will table a suitable question, I shall ensure that he receives examples of exemptions at different levels.

There is still widespread misunderstanding about the precise way in which tariff income operates. It is not true that the tariff income rule reduces benefit entitlement by the same, equal amount. Where a person's income is greater than the set applicable amount, only 15p per week is deducted from maximum benefit for every £1 of weekly excess income over the applicable amount.

Hon. Members have expressed concern about the interest applied by the tariff income. As I have said, the benefit system has to be considered in totality. I shall give an example to the House. A person with tariff income of £25 a week would not see benefit reduced by £25 a week. The benefit would be reduced by 15 per cent. of £25, which would be only £3.75 a week. That should be understood. It is being spread around the system that once a certain amount is exceeded there is a pound for pound reduction in benefit. That is not true. Only 15 per cent. is taken into account. I leave it to those on the Opposition Front Bench or Back Benches to speak.

Mr. Jeff Rooker (Birmingham, Perry Barr) : I am appalled by the Minister of State's approach. The debate is limited to 47 minutes and it is clear that as many Conservative Members as Opposition Members wish to question him. It would have been suitable and appropriate for him to respond immediately after my hon. Friend the Member for Oldham, West (Mr. Meacher) resumed his place. The Minister would then have had the time to allow his hon. Friends to intervene. I do not understand why he is so shy about being accountable to the House. He chose to intervene shortly before midnight to promise secret discussions--it seems that they are to take place behind closed doors--in an endeavour to shut up his right hon. and hon. Friends. Conservative Members have cottoned on to the con of the Chancellor of the Exchequer. Whether the percentages are 20.8, 20 or 15, those outside this place know that last week's Budget statement contained a con. Who are the 15,000 with £16,000 in the bank who will benefit? These people will have an ordinary income of less than £20 a week. Who is sitting on £16,000 with an income of less than £20 a week? We are talking of a total income of about £20 a week, not extra income. I shall follow with interest the questions that are tabled over the next few months to ascertain what the DSS knows about these people. Did those in the DSS know what the Chancellor of the Exchequer was to say, or the consequences of it? Did they understand the effect of not raising the lower limit, and especially the effect of his statement in Scotland? If they did know, did they tell the Chancellor before he made his speech? The Minister of State must know that his Department is the repository of expertise on these matters. His officials know what is happening. The problem is--this became clear during a sitting of the Public Accounts Committee last year-- that they do not tell Ministers unless Ministers ask.

We discovered that the effect of the housing benefit changes was known to all the officials. They said, "We never said anything about this, because the Ministers never asked us." The PAC took a dim view of the official who said that. The problem was that Ministers were not asking, "What are the effects and the consequences of this change of policy?"

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In this instance--let us concentrate on the doubling for poll tax for the moment--did Ministers ask the departmental officials what would be the effects, pitfalls and anomalies that would result from the change in policy? If Ministers do not put that question to their officials, they are not fit to be Ministers. The House knows that officials will not provide information freely unless they are asked to do so. That is a great worry to all hon. Members, and especially to members of Select Committees. I shall give way if the Minister wants to answer those questions. The House should be aware of the views of Ministers.

Mr. Scott : Before my right hon. Friend the Chancellor made his announcement, he discussed it with Ministers at the Department of Social Security. We welcome, as I believe does the whole House, his announcement on the increasing of the limits.

I respond to the hon. Member for Birmingham, Perry Barr (Mr. Rooker) by asking some other questions. Does the Labour party welcome the announcement made by my right hon. Friend the Chancellor to increase the limits? Does it accept that new clause 1 is incompetent and ineffective and contains anomalies? Does it accept that I am prepared to listen to my hon. Friends and to others who want to discuss this, to answer parliamentary questions and to give examples of exemptions? Does it accept that the rather superficial acceptance that 20.8 per cent. is assumed as income on capital is a misapprehension of the true position? When income from £3,000 to nought is averaged out, one gets nowhere near 20.8 per cent. When one takes account of the taper of 15 per cent. instead of 20 per cent., which operated under the rating system, it is even more beneficial. Does the Labour party, particularly the hon. Member for Perry Barr, accept those points?

Mr. Rooker : Before the Government took office, we had a much fairer system of taking account of people's savings than capital cut-off. The Government have sought to squeeze people who have few savings and a bit of extra pension to cut benefits, and that has led to this anomaly. The anomaly will continue with benefit after benefit unless there are major changes to the policy.

The Minister knows that my right hon. Friend the Leader of the Opposition welcomed the doubling of the limit by the Chancellor, but we are entitled to attack the consequences of making that change but not changing the lower limit. The message that that gave to the British people was not the one that the Government intended to give. As the hon. Member for Glasgow, Govan (Mr. Sillars) said, the message was intended to make people think : "I am now entitled to a rebate, whereas previously I was turned down for being over the £8,000 limit. What will my rebate be?" I have had to give the same answer to my constituents as other hon. Members have had to give theirs--"The chances are that you will not get a penny piece. If you do, it will be a few bob rather than a few pounds."

Mr. Hawkins : I know that the hon. Member would not want to mislead the House. He knows that I share his concern, but a couple under 75 with savings of £16,000--a tariff income of £52 a week--can receive the state pension and still qualify for community charge rebate in any area where the community charge, or poll tax, is more than £300.

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Mr. Rooker : The capital limit is exactly the same for a single person as for a couple.

Mr. Hawkins : Not a single person--a couple.

Mr. Rooker : I am talking about an individual. I was asking how people with savings of £16,000 survive on such meagre incomes. The Secretary of State said that 15,000 people with savings of £16,000 would benefit. I want to know where they are, what their incomes are and how they survive on such low incomes.

It is easy for Ministers to say, "We do not like new clause 1 ; it has a technical defect." What a defence for a Minister who has an army of civil servants and who will have a chance to correct any defect in the new clause in the other place. If he had the good grace of some other Ministers, he would have said, "We shall consider the new clause" and would not have nit- picked. I shall happily vote for new clause 1, because any technical defects can be corrected at a later stage.

Mr. Wilson : When we support the new clause, we shall do so soberly and with good sense. However, when the Chancellor made his announcement-- which we have since discovered is worthless--during the Budget statement, Conservative Members waved their Order Papers as though it was Christmas and as though the Chancellor was dispensing millions of pounds to tens of thousands of pensioners. Conservative Members should have been a little more circumspect and found out what it was worth. Will not their embarrassment on the poll tax, as in so many other areas, be heightened when, once again, they return to their constituents and have to tell them that this so-called concession is a con?

Mr. Rooker : Conservative Members thought that they were waving goodbye to us, when what they did not know was that the Government were waving goodbye to the rebate--

It being Twelve o'clock, Mr. Deputy Speaker-- proceeded, pursuant to the Order this day, to put forthwith the Question already proposed from the Chair.

The House divided : Ayes 204, Noes 307.

Division No. 143] [12 midnight

AYES

Abbott, Ms Diane

Allen, Graham

Alton, David

Anderson, Donald

Archer, Rt Hon Peter

Armstrong, Hilary

Ashley, Rt Hon Jack

Ashton, Joe

Barnes, Harry (Derbyshire NE)

Barnes, Mrs Rosie (Greenwich)

Barron, Kevin

Battle, John

Beckett, Margaret

Beith, A. J.

Bell, Stuart

Benn, Rt Hon Tony

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

Bermingham, Gerald

Blair, Tony

Blunkett, David

Boyes, Roland

Bradley, Keith

Brown, Nicholas (Newcastle E)

Brown, Ron (Edinburgh Leith)

Buckley, George J.

Caborn, Richard

Callaghan, Jim

Campbell, Menzies (Fife NE)

Campbell, Ron (Blyth Valley)

Campbell-Savours, D. N.

Carlile, Alex (Mont'g)

Cartwright, John

Clark, Dr David (S Shields)

Clarke, Tom (Monklands W)

Clay, Bob

Clelland, David

Clwyd, Mrs Ann

Cohen, Harry

Cook, Frank (Stockton N)

Cook, Robin (Livingston)

Corbett, Robin

Corbyn, Jeremy

Cousins, Jim

Crowther, Stan

Cryer, Bob

Cummings, John

Cunliffe, Lawrence

Cunningham, Dr John

Dalyell, Tam

Darling, Alistair

Davies, Rt Hon Denzil (Llanelli)

Davies, Ron (Caerphilly)

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