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Mr. Norman Lamont : This has been a lively debate. It could hardly have been otherwise, with contributions from my hon. Friend the Member for Billericay (Mrs. Gorman) and from the hon. Member for Brent, South (Mr. Boateng). We all understand why the hon. Member for
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Brent, South has had to leave the Chamber repeatedly during this debate ; we regret that, and sympathise with him and with his constituents.Let me join other hon. Members in congratulating the hon. Member for Mid- Staffordshire (Mrs. Heal). Everyone who heard her maiden speech will agree that it was outstanding. It was not only confident, eloquent and authoritative but extremely knowledgable, and it demonstrated that the disabled and mentally ill have recruited a powerful ally. All Conservative Members also appreciated her generous tribute to John Heddle.
The hon. Member for Brent, South made a robust attack on the Government. Although it was an attack, he was right to identify many conflicting considerations and genuine dilemmas. I shall explain the Government's philosophy and approach, which--as the hon. Gentleman rightly said--is different from the approach that we adopted in last year's Finance Bill.
My hon. Friend the Member for Gedling (Mr. Mitchell) was right to say that we must bear in mind not only the Bill's social consequences but the consequences of our taxation policy. It is the Government's philosophy--and their repeated intention--to broaden the tax base, and whenever possible to limit the use of special reliefs. It is true that we have made special exemptions where we considered that appropriate. However, on the whole the cost of those reliefs has been modest. In general, our aim has been greater neutrality and a broader tax base, with lower rates and limited reliefs. Some of the proposals made in the debate would involve large amounts of money--perhaps not as an immediate consequence of the amendments, but they would be likely to move the boundaries of relief further away.
My hon. Friend the Member for Bristol, North-West (Mr. Stern) accurately summed up the purpose of the Budget changes. The hon. Member for Brent, South frequently used the word "largesse". I am not sure that Conservative Members have used it in relation to the amendment. My hon. Friend the Member for Bristol, North-West rightly stressed that the clause was not intended as a step towards a general child care allowance. We have never claimed that. The hon. Member for Berwick-upon-Tweed (Mr. Beith) repeated his request for a general child allowance, extending to child care in the home, but I do not agree with that in principle, and it would also be extremely expensive. It was never our intention, and it is not what the changes were designed to achieve.
Familiar points about tax policy were implicit in the speech of my hon. Friend the Member for Gedling. We do not want employers to be able to formulate tax-efficient remuneration packages ; by and large, we want people to be remunerated in cash. We want fewer benefits in kind. That has been the idea behind many of our changes--for instance, the taxation of company cars.
My hon. Friend the Member for Orpington (Mr. Stanbrook) made his views clear, as he has done before. The Government's view is that the tax system should be neutral : it should be left to individuals to decide whether they wish to work or to stay at home with their children. I do not think that that neutrality is substantially compromised by this limited change. My hon. Friend the Member for Bristol, North-West emphasised that the change is limited. The hon. Member for Brent, South asked why we were making the change. There are several reasons. First, it was
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put to us repeatedly that employers found it troublesome to continue assessing and reporting to the Inland Revenue the value of day nurseries. Secondly, it was argued that the burden on industry was an effective deterrent to the development of workplace nurseries. It was also argued repeatedly in the House that there was some resentment about the tax treatment of workplace nurseries. We have made a limited change, putting the tax treatment of workplace nurseries very much in line with that of other benefits in kind. For example, there is a tax exemption for workplace canteens that are provided on the premises. The treatment of workplace nurseries is broadly analogous to those limited concessions.7 pm
In the Budget and in the Bill we have done exactly what the Labour party asked us to do when we debated the Finance Bill last year. Benefits in kind are extremely complicated and it is difficult to draw boundaries. There are only two ways of achieving a policy that does not create anomalies. One is to have no relief whatsoever, and the other is to go to the extreme proposed by the hon. Member for Berwick-upon-Tweed and have relief for all the costs of child care, including child care at home. That would be enormously expensive and would carry a heavy dead weight cost.
Mr. Beith : I should like to get the definition right. I referred not to all the costs but to the costs incurred in all kinds of child care.
Mr. Lamont : I accept the correction, but the costs would still be huge, and would carry a large element of dead weight.
The hon. Member for Brent, South pointed out the irony that last year I resisted precisely what we have done in this year's Budget. I have had it quoted back to me that I said that if we moved a small way we would create a great deal of pressure for much more relief. Looking at the 20 amendments that have been tabled, I realise that all the arguents I used last year were not exactly lacking in force. None the less, it is right that we are making a small, limited change and it is equally right that it should be ring-fenced.
The hon. Member for Berwick-upon-Tweed referred to amendment No. 41, which proposes that any contribution by an employee to the cost of a nursery place provided for by an employer shall be deductible for tax purposes. It would be difficult to concede that principle in addition to the concession that we have already made that it would not be assessable to tax as a benefit. It would create a clear unfairness against those who were paying their own child care costs and did not have the benefit of a workplace nursery. To do that on top of the concession we have already made would exacerbate that unfairness.
Mr. Raison : My right hon. Friend has been making an extremely good speech directed against his own proposals. He has argued the case against tax relief on benefits in kind ; he has argued that as a matter of general policy we should not be looking for more tax relief, especially when they give particular benefit to those who are better off. He also said that he sought equal treatment. How can one possibly say that there is equal treatment if one provides tax relief to those who are earning money yet provides
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nothing for those families in which the mother stays at home to look after her children? It appears to me to be a fundamentally unequal proposition.Mr. Lamont : As I have tried to explain, we have made an extremely limited concession at a cost of some £10 million. It is precisely analogous to the way in which we treat certain other benefits in kind and communal facilities such as sports facilities and canteens which are provided on the employer's premises. Only in those circumstances are they exempt from tax. That is already built in to our policy on the taxation of benefits in kind. I do not think that what we have done is markedly out of line with the treatment of other benefits. That is why we can make a limited move in that direction. The hon. Member for Brent, South also talked about amendments Nos. 8 and 9. The hon. Member for Berwick-upon- Tweed and my hon. Friend the Member for Colne Valley (Mr. Riddick) were concerned about small companies. Under the Bill it is possible for people to share in the provision of nurseries. They have to share in the financing and the management of them. We shall see whether we can clarify that in some document, but it is not intended that the management responsibility should be onerous. It would be quite sufficient for the company to monitor the performance of the nursery and to be represented on the management committee ; it does not mean it would have to be involved in its day-to-day management, nor does finance have to be provided in equal proportions between the partners. It will be possible for firms to collaborate.
In the interests of saving time, perhaps I could write to the hon. Member for Berwick-upon-Tweed. I can assure him that the anxieties he expressed about companies getting together and about the BBC participating in a facility in this building are not well grounded, but I shall write to him and explain why. I shall also write to my hon. Friend the Member for Colne Valley. It will be possible for companies to operate as a group and for small companies to participate in such schemes.
My hon. Friend the Member for Billericay spoke to amendments Nos. 25, 26 and 27 with her customary verve and exuberance, and we all very much enjoyed listening to her. Amendment No. 25 seeks to insert a new provision into the Income and Corporation Taxes Act 1988 so that child care provided for an employee, including vouchers, cash allowances and reimbursement of expenses, would be exempt from taxation as a benefit in kind. I was rebuked by my right hon. Friend the Member for Aylesbury (Mr. Raison), but that really would drive a coach and horses through the tax system. We do not give people relief for vouchers except to a de minimis amount for meals or for travel. There is no limit to the number of things for which people might claim the reimbursement of expenses or a voucher for the purchase of a benefit. They might claim that any important purchase should be exempt from tax. Apart from the objection made by my hon. Friend the Member for Bristol, North-West, that would be difficult to police. My hon. Friend's amendment shifts the relief much more in the direction of a general child care allowance. It would be much more difficult to defend the new boundary line if employers were allowed to remunerate bought in nursery care and it would be easy to ask why employers should not fund child minders. It would be extremely difficult to draw that distinction.
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I am well aware that my hon. Friend wants there to be a general child care allowance, so perhaps she will forgive me if I am a little suspicious of why she proposes pushing the boundary only so far, leaving me a little anxious that it will be difficult to resist her next campaign. That applies equally to amendment No. 27.In amendment No. 26, my hon. Friend comes a little way towards meeting us because she proposes the conditions that child care should not be provided at the residence of the child. But in doing that she is in slight danger of creating another anomaly, because employer funding of a nanny at a person's home would be excluded, but if a child was left at a child minder's home elsewhere that would be covered. That would be a very difficult boundary to defend. The cost of what my hon. Friend and other hon. Members have been proposing might be relatively small in the first few years, but it would gradually build up and, if it became more like a child care allowance, it would involve a significant sum of money. A general child care allowance would certainly cost hundreds of millions of pounds. The amendments underline the fact that there is no logical stopping point in the debate ; it is extremely difficult to draw the line. We have made a modest, limited amendment. I have tried to explain the reasons for making it, and I believe that it will make life a little easier for some employers. There is little tax revenue at stake. The amendment that we have made accords with the general policy on the taxation of benefits in kind. It is a limited change, and it will do a modest amount of good. In that spirit, I commend the clause to the House and urge it to reject the amendments.
Mr. Boateng : I thank the Chief Secretary and hon. Members for their forbearance when I had to leave the Chamber. There has been a deplorable, murderous attack on a soft target in Wembley surrounded by civilians' homes and people going about their ordinary business. That attack was futile and mindless, and those who perpetrate such attacks will not succeed in their objectives. On behalf not only of my constituents but of the whole House, I thank the police and ambulance services for their sterling work in dealing with the deceased and injured.
The debate has demonstrated the almost schizophrenic nature of the Conservative party on this issue. We heard from that tendency within the Conservative party which is geared to the philosophy of kinder, ku"che, kirche. They are concerned that women should remain with their children by the hearth and in the church. They see no role for them in the wider world. That philosophy is epitomised by the hon. Member for Orpington (Mr. Stanbrook), and it is alive, well and flourishing in the Conservative party.
There is the hard-line tendency, ably demonstrated by the Chief Secretary, who was almost dragged to the Dispatch Box to make the concession announced by the Chancellor, presumably against the Chief Secretary's best advice, in the Budget. That is why the Chancellor talked of a small measure and said :
"We have always made it clear that it is not for the Government to encourage or discourage women with children to go out to work. That is rightly a decision for them to take, and one in which the Government would be wise not to interfere."-- [Official Report, 20 March 1990 ; Vol. 169, c.1020.]
The Financial Secretary to the Treasury (Mr. Peter Lilley) : Hear, hear.
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Mr. Boateng : I hear the Financial Secretary say, "Hear hear." The erstwhile Secretary of State for Employment, before he returned to the bosom of his family, declared the 1990s to be the decade of the working woman.
Conservative Members must decide which of those tendencies they will adhere to--the recidivist, atavistic tendency of the hon. Member for Orpington, the monetarist tendency, which is in its last gasps, of the Chief Secretary or the more benign tendency of the former Employment Secretary, whose banner was well taken up by the hon. Member for Gedling (Mr. Mitchell), and who deserves a word of praise. He erred--the Chief Secretary will know this --in expecting Labour Members to say "thank you" for this measure, because in 1984, where this aberration has its origins, the Conservative party agreed that it was better to put those who seek to obtain a company car in a preferential position compared with those who seek to obtain and use a workplace nursery. Conservative Members--and the Chief Secretary encouraged them--were responsible for elevating a Porsche above Petula and Patrick. That is the reality--the Porsche comes first, and let Petula and Patrick's parents take care of them.
The Government have changed a bit, but they have not changed enough. That is why we intend to press amendment No. 9, which deals with our most modest request--that employees, particularly those employed by small companies, have the option to attend community nurseries, voluntary nurseries or local authority nurseries if that is what they decide. That is in accordance with the reality of the demand and the spirit of the Bill.
Mr. Riddick : Will the hon. Gentleman give way?
7.15 pm
Mr. Boateng : No, I am afraid that time is too short.
I must take to task the hon. Member for Bristol, North-West (Mr. Stern), who suggested that amendment No. 41 is profligate. "How much would it cost?" came the cry, as though we were about to take billions from the Treasury. If the hon. Gentleman looks in a little more detail at amendment No. 41--I know that he will give it his attention, if not now, in due course--he will find that it is strictly limited to workplace nurseries, bearing in mind the strictures of the Chief Secretary. Any contribution made by the employee will become taxable in the employer's hands. The employer may pay tax at 35 per cent. while the employee pays tax at 25 per cent. in these circumstances, there is a net gain to the Treasury. What could be more prudent, more moderate or more in tune with the correct degree of fiscal rectitude than that? It is indeed a modest amendment. If there were any justice or any truth in Conservative Members' approach to these matters, they would accept amendment No. 41. If they cannot do so, we say that they should accept amendment No. 9. Let them do something for the kids, something for employers who are seeking to expand the pool of skilled labour on which they might usefully draw, and something for the working women and parents of this country, because--let us make no bones about it-- the Government may do nothing now but we shall do something soon and we shall do a great deal.
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The Chairman of Ways and Means (Mr. Harold Walker) : Do I understand that the hon. Gentleman will seek to divide the House on amendment No. 9 and that he will therefore seek to withdraw amendment No. 41?Mr. Boateng : Yes. I beg to ask leave to withdraw the amendment. Amendment, by leave, withdrawn.
Amendment proposed : No. 9, in page 11, line 27, leave out from persons' to end of line 30.-- [Mr. Boateng.]
Question put, That the amendment be made :--
The Committee divided : Ayes, 176, Noes 259.
Division No. 211] [7.16 pm
AYES
Abbott, Ms Diane
Allen, Graham
Alton, David
Anderson, Donald
Archer, Rt Hon Peter
Armstrong, Hilary
Barnes, Harry (Derbyshire NE)
Barnes, Mrs Rosie (Greenwich)
Barron, Kevin
Battle, John
Beckett, Margaret
Beith, A. J.
Benn, Rt Hon Tony
Bermingham, Gerald
Bidwell, Sydney
Blunkett, David
Boateng, Paul
Boyes, Roland
Bradley, Keith
Brown, Gordon (D'mline E)
Brown, Nicholas (Newcastle E)
Brown, Ron (Edinburgh Leith)
Bruce, Malcolm (Gordon)
Buchan, Norman
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
Cryer, Bob
Cummings, John
Cunliffe, Lawrence
Cunningham, Dr John
Dalyell, Tam
Darling, Alistair
Davies, Rt Hon Denzil (Llanelli)
Davies, Ron (Caerphilly)
Dewar, Donald
Dixon, Don
Dobson, Frank
Doran, Frank
Dunnachie, Jimmy
Dunwoody, Hon Mrs Gwyneth
Eadie, Alexander
Eastham, Ken
Evans, John (St Helens N)
Ewing, Harry (Falkirk E)
Ewing, Mrs Margaret (Moray)
Fearn, Ronald
Field, Frank (Birkenhead)
Flannery, Martin
Foot, Rt Hon Michael
Foster, Derek
Foulkes, George
Fraser, John
Fyfe, Maria
Galloway, George
Garrett, John (Norwich South)
Garrett, Ted (Wallsend)
Gould, Bryan
Graham, Thomas
Griffiths, Nigel (Edinburgh S)
Griffiths, Win (Bridgend)
Grocott, Bruce
Heal, Mrs Sylvia
Healey, Rt Hon Denis
Hinchliffe, David
Hoey, Ms Kate (Vauxhall)
Hogg, N. (C'nauld & Kilsyth)
Home Robertson, John
Hood, Jimmy
Howells, Dr. Kim (Pontypridd)
Hughes, John (Coventry NE)
Hughes, Robert (Aberdeen N)
Hughes, Roy (Newport E)
Johnston, Sir Russell
Jones, Barry (Alyn & Deeside)
Jones, Martyn (Clwyd S W)
Kaufman, Rt Hon Gerald
Kennedy, Charles
Kinnock, Rt Hon Neil
Kirkwood, Archy
Leighton, Ron
Lestor, Joan (Eccles)
Lewis, Terry
Litherland, Robert
Livingstone, Ken
Livsey, Richard
Lloyd, Tony (Stretford)
Loyden, Eddie
McAllion, John
McAvoy, Thomas
McFall, John
McKelvey, William
McLeish, Henry
Maclennan, Robert
McWilliam, John
Madden, Max
Mahon, Mrs Alice
Marshall, David (Shettleston)
Marshall, Jim (Leicester S)
Martin, Michael J. (Springburn)
Martlew, Eric
Meacher, Michael
Meale, Alan
Michie, Bill (Sheffield Heeley)
Mitchell, Austin (G't Grimsby)
Molyneaux, Rt Hon James
Moonie, Dr Lewis
Morley, Elliot
Morris, Rt Hon J. (Aberavon)
Mowlam, Marjorie
Mullin, Chris
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